Mumbai: The banking system in India is healthy enough to withstand any negative spillovers from external headwinds emanating from the ‘Jackson Hole’ speech by the US Fed, Reserve Bank of India (RBI) Governor Shaktikanta Das said Monday. He was addressing the annual gathering of the Fixed Income Money Market and Derivatives Association of India (Fimmda) when he made the observations.
Shaktikanta Das said, the central bank and government have taken enough measures, such as maintaining high forex reserves (USD 561 billion as of August 26) and other steps to keep the banking system healthy enough to withstand any external headwinds.
Since the ‘Jackson Hole’ summit last week, markets all over the world have become extremely volatile and uncertain with highly destabilising effects on emerging markets, Das said. However, he pointed out that these aforementioned measures have ensured that the health of our banking system is sound enough to weather any negative spillovers from external headwinds.
The governor also forecast for better days on the inflation front. Das said he expects the price index to cool off from the second half and moderate further from the fourth quarter.
On the rupee, which has weathered the storm since the US started hiking rates and has been one of the best performing emerging market units, he assured that the central bank is there in the market every day so as to prevent excess volatility in the rupee and also to anchor expectation around its depreciation. “The rupee has lost only 4.5 per cent against the dollar, while all other currencies lost much higher,” Das observed.
On the monetary policy, Das said going forward the policy will be watchful, nimble-footed and calibrated. The governor also said the central bank and the government are working on issuing sovereign green bonds.
