The 13.1% depreciation over the past one-and-a-half years appears to be a temporary phenomenon, says RBI DG

The Reserve Bank of India (RBI) Deputy Governor Poonam Gupta on Wednesday said that there is a fair case for the rupee to not just stabilise but even appreciate from current levels, as the currency's 13.1 per cent depreciation over the past one-and-a-half years appears to be a temporary phenomenon. "If anything, there seems to be a fair case for the rupee to not just stabilise but perhaps even appreciate from the current levels, as was being anticipated by the market analysts when the capital flow measures were first announced," she said. "Put together, these arguments indicate that one may think of the cumulative depreciation of the INR (or shall one say its overcorrection) in the past year and a half to be a temporary phenomenon," she said. With the RBI remaining committed to ensuring orderly conditions in the foreign exchange market, and having the wherewithal to meet decades worth of CAD, or the net BOP deficit, the current market dynamics do not appear especially well-founded.