Mumbai: RBI must allow rupees against dollars containing import inflation that comes mainly from crude oil prices and helps drive exports, because the current risk of account of oil prices can be contained at 1.4 percent of GDP, according to a report.
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Crude rallies and fears produced against the current account deficit have seen rupees down from 73.09 on September 1 to a low of 75.52 to one dollar on October 12.
But it has re-appreciated and currently around 75, it can be seen from the forex market change of $ 2.2 billion from the supply of excess dollars in August – clearly shows the appreciation bias on the rupee.
Reserve Bank has continued to make forex purchases, and in FY21, he bought RS 5.1 Lakh Crore Forex and the foreign exchange reserve swelled $ 103.72 billion.
Despite the second wave, the rupee gained strength and even went under 73 to one dollar, said SBI Research on Thursday in his report.
Take everything into a strong FDI account in the middle of some volatility in the final FPI stream – CAD projection we stand at 1.4 percent of GDP for full years, which is comfortable, and if there is no third wave that is very devastating, rupee will handle every taper news with relative tranquility, the report notes.
Considering higher domestic inflation, due to supply disruption, it will not endanger the RBI to lean against the wind and let the rupee appreciate, because it can cause reduced inflation of import when the price of metals and oil rises, and clean up the liquidity, and clean up the liquidity of overhang to a certain extent, Add it.
This is more than that because the re-relationship in the global value chain is higher than the advanced linkages and weak rupees may not help in encouraging as much exports as possible by traditional economic theory, the report said.
The report also said that the RBI had applauded globally because of effective exchange rate management.
The IMF in the IV article recently released, consultation welcomed the commitment of the authorities to maintain the flexibility of exchange rates.
Noting that the average wholesale price inflation at 11.6 percent on H1 FY22, and the CPI of 5.34 percent, the report said since the emergence of pandemics in 2020, consumer prices and wholesale price inflation rates have exhibited differences.
These developments lost fears of producers who wrestle with very high import inflation and fallen rupees only add to their misery, he added.
Rally is currently in oil prices due to shortage of global supply and strong demand because the world recovers from a pandemic reminding in early 2010 when oil is above $ 100 per barrel.
The current account deficit, which has touched 4.82 percent of GDP at FY13, began to decline and has not exceeded 2.1 percent since then.
However, the increase in crude oil prices and the entire supply side congestion because the pandemic increases worries and between May and September 2013 Rupee loses as much as Rs 14 dollars.
September 2021 trade deficit of merchandise $ 22.59 billion is quite high and has the closest partner in October 2012 when $ 20.21 billion.
So far the export is quite good with the export of merchandise in H1 2021, touching $ 197.9 billion, a strong increase of 24.3 percent more than $ 159.2 billion in H1 2019.
Thus, reaching the $ 400 billion target is not a dream The pipe and this will give a strong pillow to the current account balance, even if the oil import bill rises quickly, the report said.