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Home / World / India's central bank needs a better rupee policy, says Modis Aide

India's central bank needs a better rupee policy, says Modis Aide



The Central Bank of India should step up its fight against the turbulence in the rupee and ensure that the currency does not fluctuate wildly, said a senior adviser to Prime Minister Narendra Modi.

"We need a better foreign exchange management policy, a sharper response and shorter response times," said Rajiv Kumar, deputy chairman of the government think tank NITI Aayog, on Wednesday in an interview. "The RBI should act smarter to smooth out volatility, rather than seeing this yo-yo-like move in rupee value."

India has been entranced into emerging market recovery triggered by rising US interest rates. After investors withdrew money from stocks and bonds, the rupee plunged 6 percent against the dollar this year, which is the worst performer among the Asian currencies tracked by Bloomberg News.

The reserves of the Reserve Bank of India fell by $ 1

1 billion five weeks to May 18, partly to stop the decline in the currency, show data from the central bank. An e-mail to the RBI spokesman remained unanswered.

Oil price rise

The South Asian nation is experiencing rising crude oil prices. Every 10-dollar increase drives up inflation by 30-40 basis points and weighs about 15 basis points on economic growth, according to Nomura Holdings Inc.

Reserve Bank of India Must Maintain Key Rates Unchanged Next Week to Boost Growth Producers seeking access to bank credit are offered a helping hand, Kumar said. The inability of banks to lend under growing bad loans poses a risk to growth this year.

RBI governor Urjit Patel has kept interest rates unchanged since August and lowered inflation forecasts before moving on to his political session became falcon in April. The recent surge in oil prices has fueled speculation that the rate-setting panel will raise rates at its meeting on June 6.

"It would be reasonable for RBI to take a steady break so that they can see if inflationary pressures are temporary." Kumar said.


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