According to a recent press report, Reserve Bank of India’s chief has said that rupee has been depreciating continuously for last few months which have affected the import cost. He suggested that as a result of this problem, the growth of central bank has been declined and the foreign exchange rate is influenced by market forces and this intervention leads to instability position.
Dr. D. Subbarao, RBI Governor said that the rupee fall has had an adverse impact on the cost of the country’s imports especially the cost of oil. He said that the issue has come up at a particularly difficult time when inflation is also high. The rupee had fallen 5.9 per cent in September and is down more than 10.5 per cent since a 2011 high of 43.855 reached in late July, making it the worst performer in Asia.RBI interventions was mainly used to check the losses rather than reducing its effects..
After the RBI board meeting, Dr. Subbarao said that appropriate measure will be taken to appreciate the Value of Rupee after proper review is made on the prevailing situation. Fuel price is 15.10 per cent in the October month, which is higher compared to previous week’s price of 14.69 per cent. The monthly inflation would now be crucial for firming views about the central bank’s likely monetary policy bearing.
The RBI has recently hiked the key policy rates which have made it mandatory for banks to hike their lending rates. The hike in lending rates has made home loan and other retail loans dearer to the borrowers.