The Indian rupee has appreciated by 3.2 percent during April-October in real terms, while other major currencies have depreciated, said Reserve Bank of India governor Shaktikanta Das in his monetary policy address on Wednesday.
Rupee should be allowed to find its level, he added. On December 6, the rupee ended at 82.62 against the dollar against Monday's close of 81.79. It opened at 82.66 on December 7 and appreciated to 82.44 during the MPC speech.
"While the governor justified INR’s resilience on net, a relatively dovish tone would not have augured well for INR which has seen sharp correction versus peers in last couple of days," Madhavi Arora, lead economist, Emkay Global Financial Services said.
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"This has been on account of already low forward premia in FX, and signalling of a pause would have further pressured the FX fwd premia on the downside, making carry trades less attractive for FPIs," she added.
Governor Das also said that size of forex reserves is comfortable and has increased. During the week ended November 25, forex reserve rose $2.89 billion to $550.14 billion, according to the Weekly Statistical Supplement released by the Reserve Bank of India (RBI).
"We had announced a series of measures in July to enhance forex inflow. As a result, new External Commercial Borrowing (ECB) agreements have been concluded for $8.6 billion," Das said.
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