RBI, Centre could take steps to halt currency slide – The Economic Times

Clipped from: https://economictimes.indiatimes.com/news/economy/policy/rbi-centre-could-take-steps-to-halt-currency-slide/articleshow/92991405.cms

Synopsis

This year, the rupee has fallen about 8% to breach the 80 mark to the dollar amid an unprecedented surge in the world’s reserve currency.

The Reserve Bank of India (RBI) and the Centre could take a series of one-off measures to halt the rupee‘s slide. These may include curbs on imports of non-essential goods, reduction in thresholds on aggregate overseas investments by resident Indians, and mandates for exporters to quicken their USD remittances.

“The central bank could look at interventions like telling exporters to bring in their dollars quickly, or asking importers to sell dollars directly to oil marketing companies if the situation worsens from here,” said Madan Sabnavis, Chief Economist,

Bank of Baroda

NSE 4.35 %.

Nudge for Quicker $ Remittance
“In a free system like ours, without imposing drastic controls on imports of certain goods and services, it’s impossible to arrest this kind of depreciation,” he said.

This year, the rupee has fallen about 8% to breach the 80 mark to the dollar amid an unprecedented surge in the world’s reserve currency. To be sure, the rupee has fared relatively better than some competing units despite the global rush for dollar-backed assets.

fallseason

The pace of depreciation appears to have quickened after the US Federal Reserve began raising the cost of funds to restrain runaway inflation, hinting at unprecedented increases in policy rates to break the price spiral in the world’s biggest economy.

Experts ET spoke with said the central bank could order exporters to bring in dollars more quickly – shortening the current timeline of nine months – to ensure they are not holding back on their earnings.

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