Exchange rate gains relevance: Reddy
India's exchange rate is gaining relevance as a monetary policy tool to curb inflation, RBI Chief said.
By Agencies |
NEW DELHI: India's exchange rate is gaining relevance as a monetary policy tool to curb inflation, central bank Governor Yaga Venugopal Reddy said.
``The exchange rate channel is relatively less important in the Indian context, though its relevance is gradually increasing,'' Reddy said in a speech at the Central Bank of Argentina, Buenos Aires, which was posted on the Indian central bank's Web site.
India's rupee is at close to a nine-year high as the central bank slowed dollar purchases on concern the funds injected from its sales of the rupee will stoke inflation. The currency gained for a fourth day today on speculation the pace of the country's economic growth, the fastest in almost two decades, is luring overseas investors to buy local equities.
The rupee rose to 40.52 against the dollar as of the 5 pm close in Mumbai, from 40.5275 yesterday, according to data compiled by Bloomberg. The currency is the best performer in the Asia Pacific region this year, having gained 9.2 percent.
Reddy also said India must cut its budget deficit to release more funds for investment in roads, ports and education and accelerate economic growth.
The public debt of India's federal and state governments as a percentage of gross domestic product is around 75 percent, which Reddy described as ``high''.
India's economy grew 9.4 percent in the year ended March 31, the fastest pace since 1989.
``The exchange rate channel is relatively less important in the Indian context, though its relevance is gradually increasing,'' Reddy said in a speech at the Central Bank of Argentina, Buenos Aires, which was posted on the Indian central bank's Web site.
India's rupee is at close to a nine-year high as the central bank slowed dollar purchases on concern the funds injected from its sales of the rupee will stoke inflation. The currency gained for a fourth day today on speculation the pace of the country's economic growth, the fastest in almost two decades, is luring overseas investors to buy local equities.
The rupee rose to 40.52 against the dollar as of the 5 pm close in Mumbai, from 40.5275 yesterday, according to data compiled by Bloomberg. The currency is the best performer in the Asia Pacific region this year, having gained 9.2 percent.
Reddy also said India must cut its budget deficit to release more funds for investment in roads, ports and education and accelerate economic growth.
The public debt of India's federal and state governments as a percentage of gross domestic product is around 75 percent, which Reddy described as ``high''.
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India's economy grew 9.4 percent in the year ended March 31, the fastest pace since 1989.
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