[ad_1]
MUMBAI: RBI governor Shaktikanta Das has said that inflation has started to soften, and the current account deficit was “eminently manageable” and within viability parameters. According to Das, the global economy is projected to contract significantly in 2023, but high policy rates for longer are seen as a distinct possibility, as projections are for a softer recession.
Speaking at the 22nd FIMMDA-PDAI annual conference in Dubai, Das said while inflation remains elevated, there has been a welcome softening during November and December 2022. Core inflation, however, remains sticky and elevated.
“Central banks have started what appears to be a pivot towards lower rate hikes or pauses. At the same time, they continue to emphatically reiterate their resolve to bring inflation down closer to targets. High policy rates for a longer duration appear to be a distinct possibility, going forward,” said Das.
The governor pointed out that historically whenever global investors turned risk-averse, the rupee had come under pressure. This was witnessed during the global financial crisis and the taper tantrums. However, during the pandemic, the rupee did better.
“In the initial days of the pandemic, between February 17, 2020 and April 21, 2020, the rupee depreciated by only 7%. Even during the period of geopolitical tensions emerging out of Ukraine in 2022, while the rupee lost 9% against the US dollar between February 24, 2022, and October 19, 2022, it outperformed the currencies of most advanced and many emerging market economies,” he said.
On the current account deficit, Das said that while slowing global demand is weighing on India’s merchandise exports, exports of services and remittances remain strong. “The net balance under services and remittances remains in a large surplus, partly offsetting the trade deficit. Consequently, the current account deficit is eminently manageable and within the parameters of viability,” he said.
Speaking at the 22nd FIMMDA-PDAI annual conference in Dubai, Das said while inflation remains elevated, there has been a welcome softening during November and December 2022. Core inflation, however, remains sticky and elevated.
“Central banks have started what appears to be a pivot towards lower rate hikes or pauses. At the same time, they continue to emphatically reiterate their resolve to bring inflation down closer to targets. High policy rates for a longer duration appear to be a distinct possibility, going forward,” said Das.
The governor pointed out that historically whenever global investors turned risk-averse, the rupee had come under pressure. This was witnessed during the global financial crisis and the taper tantrums. However, during the pandemic, the rupee did better.
“In the initial days of the pandemic, between February 17, 2020 and April 21, 2020, the rupee depreciated by only 7%. Even during the period of geopolitical tensions emerging out of Ukraine in 2022, while the rupee lost 9% against the US dollar between February 24, 2022, and October 19, 2022, it outperformed the currencies of most advanced and many emerging market economies,” he said.
On the current account deficit, Das said that while slowing global demand is weighing on India’s merchandise exports, exports of services and remittances remain strong. “The net balance under services and remittances remains in a large surplus, partly offsetting the trade deficit. Consequently, the current account deficit is eminently manageable and within the parameters of viability,” he said.
#Inflation #easing #current #deficit #manageable #RBI #governor #Das
