India’s Central Bank is Planning to utilise FX Reserves to Manage Market Volatility?

Sanjay Malhotra the New RBI Governor of India, during the discussions with the officials for his first monetary policy meeting which is going to be held in the month of February, the governor has shown more interest to make use of the foreign exchange reserves for Indian Currency legally, due to the raising volatility in the currency market. The objective focuses more on avoiding the target for the rupee and to prohibit the excessive volatility. 

The Bloomberg News report has influenced the rupee and began to lose 0.14 percent and fallen into a new record low of 86.7025 per dollar but the loss has been recouped soon. The rupee has flumped to two percent since the departure of the previous governor Shaktikanta Das. After Trump’s victory in early November, the value of the rupee slumped by 3% against the US dollar. 

As per the statement given in the Economic Times by one of the sources states, 

“There is no question of trying to manage competitiveness as such, as India is not an export-oriented economy. We are more import-dependent, so it is important that the RBI does not allow runaway depreciation. So to that extent, they will be there in the market”