New Delhi: the Reserve Bank of India (RBI) Governor Shaktikanta Das has stated that the rupee has emerged as one of the least volatile currencies globally, remaining “very stable against the US dollar”, and the volatility index
It is perhaps no coincidence that the RBI Governor’s statement follows the latest note by global investment firm Jefferies, which said the rupee is now the most stable currency among major economies.
According to Das, the central bank’s policy is to prevent excessive rupee volatility.
“Stable rupee fosters confidence among market participants, investors and the wider economy,” Das said in reports.
The RBI has actively engaged in the foreign exchange market to manage rupee fluctuations, primarily employing public sector banks (PSUs) as intermediaries to sell US dollars.
These PSUs play a crucial role in stabilising the rupee by executing the RBI’s foreign exchange operations, thereby contributing to the currency’s stability.
The Central Bank occasionally intervenes in the market through liquidity management, including by selling dollars, to prevent a steep depreciation in the rupee.
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Market analysts said the dollar weakness has been a significant factor in keeping the rupee relatively stable, with only minor declines against the dollar.
The focus is now on the upcoming US Fed Reserve policy meeting on September 16. Jateen Trivedi, VP Research Analyst—Commodity and Currency, LKP Securities, said a 0.25 percent rate cut and a dovish stance are widely anticipated.
The certainty of a Fed interest rate cut has increased after jobless claims rose to 230,000 compared to the expected 228,000, giving the Fed more room to ease rates. This potential rate cut is expected to influence the rupee’s stability, as it could lead to a shift in global capital flows, affecting the rupee’s exchange rate against the dollar.
On Tuesday, the rupee appreciated by 2, praising to 83.84 against the US dollar in early trade.
According to market experts, the USD/INR pair is expected to remain volatile, with support between 83.80 and 83.70 and resistance at 84.05-84.15. This means that the rupee’s exchange rate against the dollar is likely to fluctuate within these ranges, reflecting the ongoing market dynamics and the influence of external factors such as the upcoming US Fed Reserve policy meeting.
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–IANS
