RBI Governor Highlights India's Economic Fundamentals Over Currency Rate
RBI Governor Sanjay Malhotra made a clear statement on Monday. He said that a nation's strength should not be measured solely by its currency's exchange rate. Speaking from Mumbai, Malhotra pointed to India's robust economic fundamentals as the real indicators of health.
Strong Economic Pillars Support India's Growth
Malhotra listed several key factors boosting India's economy. High growth rates and low inflation provide a stable foundation. Financial stability remains intact across sectors. Healthy investment and consumption patterns show domestic confidence. High foreign exchange reserves offer a strong buffer against global shocks.
The governor addressed concerns about the rupee trading around 90 to a dollar. He dismissed the idea that this signals economic weakness. In an interview with NDTV Profit, Malhotra noted that the rupee's movements have been orderly. He emphasized that volatility has not been excessive.
Market-Driven Exchange Rate Policy Stays Firm
Malhotra reiterated the Reserve Bank of India's consistent stance on exchange rates. He stated that the rupee's level should be determined by market forces. The RBI believes in the robustness of India's financial markets.
"Our policy on the rupee has been steady over the years," Malhotra said. "Markets here are deep and wide. They will ultimately set the prices." This approach allows natural adjustments without heavy intervention.
Foreign Investments Flow on Growth Prospects
India continues to attract foreign investments due to strong domestic growth. Malhotra cited recent free trade agreements with various countries and blocs. He also mentioned large commitments from global giants like Amazon, Google, and Microsoft.
However, the governor cautioned that inflows might not remain constant every year. "Overall, India should keep drawing quality investments," he explained. These investments span banking, technology, and the broader economy.
Malhotra stressed that such inflows result from long-term efforts. "Investors see sector resilience and India's growth prospects," he said. "This is patient capital, not hot money."
Inflation Trends Show Comfortable Levels
Discussing consumer inflation, Malhotra noted current low rates. Food price base effects and soft global commodity prices contribute to this trend. As these effects fade, inflation is already rising.
RBI projections indicate inflation moving toward 3-4%. Malhotra described this as a comfortable range. Core inflation remains well-behaved, supporting overall stability.
Government data shows India's consumer inflation at 1.3% in December. This marks a three-month high, up from 0.7% in November. The RBI views these levels as manageable within its framework.
