From The Economic Times · Dilasha Seth · · 50s
RBI Ex-Gov Subbarao: Rupee Correction Fails Fundamentals
Former RBI governor says forcing rupee to artificial levels ignores economic reality.
In brief
Former RBI governor says forcing rupee to artificial levels ignores economic reality. RBI should let rupee adjust naturally rather than artificially correcting it against economic fundamentals. Originally reported by The Economic Times.
RBI Ex-Gov Subbarao
Former RBI governor D Subbarao says correcting rupee to levels that ignore economic fundamentals will be futile through costly short-term measures.
“The rbi should allow the rupee to find its level while managing the trajectory, rather than trying to control it at a particular level”
Rupee Recovery Measures
RBI introduced special usd window for oil marketing companies, foreign exchange risk reserve, tighter forex-derivative restrictions, omo sale and higher crr requirements.
Rupee Depreciation Causes
Capital outflows and tax regulation unpredictability are deeper structural causes of rupee depreciation than oil prices and import bills.
Tax Reforms Needed
Subbarao says tax reforms are essential to attract foreign investment by improving predictability of india's regulatory environment.
The one thing
RBI should let rupee adjust naturally rather than artificially correcting it against economic fundamentals.
