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Reserve Bank of India unlikely to let rupee appreciate much: Experts

Excess liquidity and cheap rates could be causing some systemic problem for the future, experts have started to warn

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“A stronger rupee doesn’t help when the economy is so weak,” said Indranil Sen Gupta, chief economist of Bank of America Securities.

Anup Roy Mumbai

4 min read Last Updated : Dec 16 2020 | 6:10 AM IST

A deluge of foreign fund inflow in India’s equity markets is getting mopped up by the Reserve Bank of India (RBI), swelling its reserves and preventing rupee from appreciating.

The intervention is leading to two outcomes: It is not letting the rupee to appreciate and adding liquidity in the banking system to help the government borrow a record Rs 12 trillion from the market.

So far, the strategy has worked well. But now the excess liquidity and cheap rates could be causing some systemic problem for the future, experts have started to warn.

RBI Governor Shaktikanta Das is mindful of that. He, however,

Topics : Reserve Bank of India Rupee appreciation Shaktikanta Das Equity markets Foreign capital inflows Forex reserves

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