Shaktikanta Das, governor of the RBI, stated on Friday that despite a hostile and uncertain international environment, India’s economy continues to remain resilient, drawing strength from its macroeconomic fundamentals. Das said India’s financial system is still strong and stable, with bank credit rising by double digits, while speaking at the 22nd Annual Conference of the Primary Dealers Association of India (PDAI) and the Fixed Income Money Market and Derivatives Association (FIMMDA) in Dubai. The RBI Governor acknowledged that inflation has remained high but stated that there was a welcome easing in November and December 2022.
Financial markets in India: In pursuit of stability and development – Keynote Address by @DasShaktikanta Governor, Reserve Bank of India – January 27, 2023 – at the 22nd FIMMDA-PDAI Annual Conference, Dubaihttps://t.co/bsJ0zoCHMi
— ReserveBankOfIndia (@RBI) January 27, 2023
Das stated that the current account deficit is eminently controllable and that the average CAD to GDP ratio for the first half of FY23 was 3.3 percent. The governor of the RBI stated that from July 2022, net FDI flows have restarted and are still high.
He stated that the government has comfortable foreign exchange reserves and low external debt ratios by international standards. Das said that there is now more liquidity in both the overnight money markets and government securities.
On rupee depreciation, Das said the currency fell seven percent against the US dollar during the initial pandemic days and nine percent between February and November last year in view of the Ukraine war. He, however added that the rupee outperformed the currencies of most advanced and many emerging market economies.
Acknowledging that the global economy is still marred by shocks and uncertainty and the IMF projecting contractions in over one-third of the global economy, Das said RBI has remained and will continue to remain steadfast in its commitment to keep the ship stable while continuing to move ahead.
The RBI Governor said Indian financial markets have been driven by two key objectives—stability and development—and added that crisis management has been a major component in this journey, noting that India is commonly seen as a bright light in an otherwise dreary globe.
As market participants get ready to manage the changes and dangers linked to internationally integrated markets, Das urged stakeholders like the FIMMDA and the PDAI to collaborate with the apex bank.