The Indian rupee has weakened essentially due to the strengthening of the dollar index but it is holding well as compared to currencies of other emerging market economies, State Bank of India Chairman Dinesh Khara said.
Depreciation of the rupee is a cause of concern, especially for a country which has significant imports, Khara told PTI in an interview on the sidelines of the annual meeting of the International Monetary Fund and the World Bank here on Friday.
The rupee closed at 82.19 against the US dollar on Friday amid a firm greenback overseas and sliding crude oil prices.
At the interbank foreign exchange market, the local currency opened at 82.26 and witnessed a high of 82.12 and a low of 82.43 before settling at 82.19.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.56 per cent to 112.99.
The Indian rupee is doing pretty well, Khara said.
“Better than us was only Indonesia, which is generally a commodity economy and Brazil. So, these are the only two currencies which did better than us,” he said.
“It is essentially the strengthening of the dollar index… which is the cause of the weakness that we have seen in the rupee,” he said.
“I would say that the (Indian) currency has not behaved as volatile as perhaps the rest of the global currencies,” he added.
Khara said even though the rupee is holding ground, its depreciation is a cause of concern.
“It is very much a cause of concern, particularly for an economy which has got significant imports. But… when the dollar is struggling, how much can the rupee hold? Still, I think in the given situation and circumstances, the rupee is holding well,” he said.
Referring to the interventions by the Reserve Bank of India, he said they are ways to check volatility.
“Typically speaking, financial markets don’t really appreciate the volatility. It is also one of the functions (of the RBI) to ensure orderly movement of the currency,” he said.
“To that extent, it is more or less holding its value. But in the larger interests, perhaps some kind of interventions are required. And that is being done,” he said.
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