Recent volatility in rupee modest against major global currencies: RBI guv

The Governor further said that while crude oil is a key driver of inflation, stopping Russian oil purchases may not significantly impact inflation at this stage

The recent volatility in the rupee is relatively modest, especially when compared to sharper fluctuations seen in major currencies like the US dollar, which has witnessed two-way movements of around 10 per cent, Reserve Bank of India (RBI) Governor Sanjay Malhotra said at the post-monetary policy press conference.

 

“There will be some volatility in the rupee as we are living in uncertain times. The volatility is not only in our currency but in other currencies as well, including the US. The US currency has seen both-side movements of about 10 per cent. So, in that context, the movement of the rupee is less,” he said.

 

The governor further said that while crude oil is a key driver of inflation, stopping Russian oil purchases may not siexably impact inflation at this stage. He explained that India sources oil from multiple countries, and any change in the composition of the import mix would depend on global crude prices and how much of the cost is absorbed or passed on through fiscal measures like excise duties. He added that the government is likely to take appropriate fiscal steps to cushion any potential shocks, and therefore, no major inflationary impact is expected for now. 

 

The rupee appreciated marginally on Wednesday after the RBI’s monetary policy committee decided to keep the policy repo rate unchanged at 5.5 per cent. However, the impending tariff on exports to the US starting Friday is expected to keep the local currency under pressure, said dealers.

 

After market hours on Wednesday, US President Donald Trump imposed a 25 per cent additional tariff on India due to continued oil imports from Russia, which would weigh on the Indian unit.

 

The rupee settled at 87.74 per dollar, against the previous day’s close of 87.8.

 

“There was some softening in the dollar index, and the RBI’s decision to pause led to marginal strengthening,” said a dealer at a state-owned bank. “The near-term outlook is that the rupee will remain under pressure because of the tariff,” he added.

 

The dollar index fell by 0.3 per cent to 98.73 on Wednesday. It measures the strength of the greenback against a basket of six major currencies.