Despite the Reserve Bank of India’s strident defence of the rupee amid the rampant strength of the greenback, the Indian currency on Friday hit a fresh low of 81.26 against the U.S. dollar. Still, the rupee remains one of the best performing currencies in the world, falling less against the dollar than a raft of emerging market and advanced economy currencies.
In a recent speech, on Sept. 5, RBI Governor Shaktikanta Das detailed the factors that contribute to the resilience of the Indian economy and the central bank’s approach to handling the currency.
Das said the central bank’s intervention in the foreign exchange market is premised on two major principles. One, to prevent excessive volatility in the domestic currency. And two, in order to anchor expectations of the depreciation of the Indian rupee.
Here are the key highlights of the governor’s speech that relate to the RBI’s rupee strategy.