The Reserve Bank of India (RBI) has said that it could do little to arrest the fall of rupee if the decline was caused by fundamental weakness of the economy or due to global factors. Speaking to reporters in Mumbai on Friday, RBI Deputy Governor KC Chakrabarty said in such a case, RBI could only take more calibrated steps in the forex market.

As a measure to contain dollar demand and help support the rupee, Mr. Chakrabarty also hinted at opening a separate window for oil companies. He also said the Government must address trade deficit issues if the fall of the rupee is due to weak fundamentals.

Talking about the forthcoming mid-quarter review of the monetary policy slated for June 18, Mr. Chakrabarty said if inflation came down, interest rate would also come down too.

On the highly disappointing GDP numbers, he warned saying if corrective measures were not taken soon, GDP would fall further.

Meanwhile, RBI on Friday launched the 28th round of the ‘Inflation Expectations Survey of Households’.

The three-month study will seek qualitative responses from 4,000 households across 12 cities on price changes and inflation expectations.

The survey results are used as one of the important inputs for monetary policy formulation.

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January 2021