September 25, 2022
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Das: Macro conditions have improved since Aug policy

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MUMBAI: RBI governor Shaktikanta Das has said that macroeconomic conditions have improved on several fronts since its August 5 monetary policy. Crude oil prices have averaged $97. 4 per barrel in August versus the central bank’s estimate of $105 and the overall softening of commodity prices have altered the assessment of current account deficit in FY23, which is now expected to remain well within sustainable levels. Additionally, portfolio inflows during August at $7. 5 billion are 16 times the July inflows.
Pointing out that India’s inflation was lower than its trading partners, Das said that with the dip in international commodity prices and the consequent easing of inflation pressures, inflation as measured by the consumer price index had peaked in April 2022.
Speaking at an event organised by the Fixed Income and Money Market Derivatives Association, Das said the government and the RBI are putting in place a framework for issuance of sovereign green bonds, in line with global standards. The government had announced in its Budget for FY23 that it will float a sovereign green bond this year.
“Reflecting these fundamental factors, the Indian rupee has moved in an orderly manner in the current financial year so far. It has held its own in a world of sharp depreciation across other emergingmarket and advanced currencies. While the US dollar has appreciated by 11. 8% during the current financial year so far, the rupee has depreciated by 5. 1%, which is among the lowest in the world,” said Das.
The governor said that the volatility in global markets following the speech of US Federal Reserve chief demonstrated that while forward guidance can be a useful policy instrument in an accommodative monetary policy phase, it can be quite difficult to provide coherent and consistent guidance in a tightening cycle.
“The difficulty gets further compounded in the current environment of high uncertainty. Such forward guidance may even have destabilising effects on financial markets, especially if the subsequent policy actions are at variance with earlier pronouncements,” said Das. According to him, the Indian economy was in a position of strength as it was seen to be the fastest growing economy in FY22.





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