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Mumbai, <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s forex reserves jumped USD 1.634 billion to USD 618.937 billion for the week ended January 12, the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>) said on Friday. In the previous reporting week, the overall reserves had declined sharply by USD 5.89 billion to USD 617.3 billion. The country's forex kitty had reached an all-time high of USD 645 billion in October 2021. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year. For the week ended January 12, the foreign currency assets -- a major component of the reserves -- increased USD 1.859 billion to USD 548.508 billion, the data said. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound, and yen held in the foreign exchange reserves. Gold reserves were down USD 242 million to USD 47.247 billion during the week, the RBI said. The Special Drawing Rights (SDRs) were up USD 12 million to USD 18.31 billion, the <keyword id="20097680" type="General" weightage="20" keywordseo="apex-bank" source="keywords">apex bank</keyword> said. India's reserve position with the IMF increased USD 6 million to USD 4.872 billion in the reporting week, the RBI data added.

Forex reserves jump $1.63 billion to $618.9 billion

Monetary policy is at work. Substantial disinflation has been achieved, but the road to be travelled stretches ahead till inflation declines to the target of 4 per cent, said an article published in <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>'s latest <keyword id="6427045" type="General" weightage="80" keywordseo="bulletin" source="Orion">Bulletin</keyword>. The government has mandated the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) to ensure retail inflation based on the Consumer Price Index (CPI) remains at 4 per cent with a margin of 2 per cent on either side. Inflation during January-February 2023 exceeded the upper tolerance limit of 6 per cent after a transitory respite during November-December 2022. The central bank, which effected six back-to-back hikes in the key short-term lending rate (repo) since May 2022 to check high inflation, decided to pause early this month. The cumulative rate hike since May 2022 is 250 basis points. The retail inflation in March fell to a 15-month low of 5.66 per cent and came back to the <keyword id="50847" type="General" weightage="50" keywordseo="reserve-bank" source="Orion">Reserve Bank</keyword>'s comfort level of 6 per cent. The article authored by a team led by RBI Deputy Governor Michael Debabrata Patra noted that the global economic conditions are beset by heightened uncertainty as financial conditions remain volatile and financial markets are on edge. In <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword>, aggregate demand conditions remain resilient, supported by a rebound in contact-intensive services. Expectations of a bumper rabi harvest, the fiscal thrust on infrastructure, and the revival in corporate investment in select sectors augur well for the economy, it said. "Monetary policy is at work. Substantial disinflation has been achieved, but the road to be travelled stretches ahead till inflation is at or close to the target of 4 per cent," said the article titled 'State of the Economy' published in RBI Bulletin April 2023. In response to monetary policy actions and supply-side measures, the authors said headline CPI inflation has gradually declined from its peak of 7.8 per cent in April 2022 to 5.7 per cent in March 2023 and is projected to ease further to 5.2 per cent in the January-March quarter 2023-24. The article further said that in time, enduring price and financial stability will strengthen the foundations of the economy and provide a fillip to growth. Central banks across the world that are invested with dual mandates are at a fork in their course. The RBI has taken the road that is less travelled by, balancing and calibrating both actions and pace, the article said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/sensex-nifty-settle-flat-in-subdued-trading-reliance-industries-earnings-eyed/articleshow/99670026.cms">Sensex, Nifty settle flat in subdued trading; Reliance Industries earnings eyed</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/best-upcoming-hybrid-electric-cars-and-suvs-in-india/articleshow/93274562.cms">Best upcoming electric and hybrid cars in India</a>

Monetary policy is at work, substantial disinflation achieved: RBI Bulletin

<ul><li>The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> has announced that it is working on a dedicated cloud facility.</li><li>The cloud facility is being developed for the country’s financial sector.</li><li>The new facility is aimed at enhancing data security and privacy.</li></ul>India’s central bank, the <keyword id="50847" type="General" weightage="80" keywordseo="reserve-bank" source="Orion">Reserve Bank</keyword> of India (<keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword>) is working on a dedicated cloud facility for the booming financial sector in India. This was announced by RBI governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> during the central bank’s Monetary Policy Committee (MPC) announcement. The cloud facility is aimed at enhancing data security and privacy. It will also offer better scalability and ensure business continuity for companies. "Banks and financial entities are maintaining an ever-increasing volume of data. Many of them are utilising the cloud facilities for this purpose. The Reserve Bank is working on establishing a cloud facility for the financial sector in India for this purpose,” said Das. Its purpose is to help smaller entities build efficiencies in terms of scale, explained Rabi Sankar, deputy governor of RBI at the post-monetary policy press conference. The cloud facility will be set up in a phased manner in the medium term. It will be initially operated by Indian Financial Technology &amp; Allied Services (IFTAS), which is a wholly-owned subsidiary of the RBI. The facility will later be transferred to a different entity, owned by companies from the country’s financial sector. There is a growing need for improved data security as there has been a steady increase in digital transactions in the country. The setting up of this cloud facility will help startups and small enterprises handle data efficiently, probably at a reduced cost compared to existing international options available. RBI MPC has decided to keep key rates unchanged at 6.5% in its December policy. Other announcements from the meet include enhancements to limits for specific categories of transactions for Unified Payments Interface (<keyword id="6358921" type="General" weightage="80" keywordseo="upi" source="Orion">UPI</keyword>). As per the new UPI transaction limits, individuals can now make payments up to ₹5 lakh per day to hospitals and educational institutions by UPI. This was earlier capped at ₹1 lakh. The central bank has also proposed to increase the e-mandate for recurring payments to ₹1 lakh from current ₹15,000. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/rbi-expects-indias-gdp-to-grow-at-7-in-fy24-keeps-repo-rate-unchanged/articleshow/105828012.cms">RBI expects India’s GDP to grow at 7% in FY24; keeps repo rate unchanged</a> <a href="https://www.businessinsider.in/stock-market/webstories/doms-industries-ipo-check-out-open-date-and-price-band/slidelist/105831826.cms">DOMS to raise ₹1,200 cr via IPO: Journey, investors and everything you need to know</a> <a href="https://www.businessinsider.in/finance/news/rbi-hikes-upi-transaction-limit-for-education-and-healthcare/articleshow/105832824.cms">UPI transaction limit for education and healthcare hiked to ₹5 lakh per day</a>

India’s central bank to establish cloud facility for financial institutions

New Delhi: <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword> has demonstrated a largely successful inflation targeting regime compared to advanced economies such as the USA, Germany, and France, according to a research report by the <keyword id="19934368" type="General" weightage="100" keywordseo="state-bank-of-india" source="keywords">State Bank of India</keyword> (SBI). The report credits government initiatives, the <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>, and banks for addressing these issues over the past decade, allowing for better policy transmission and improved inflation management. "The success of Inflation Targeting in India is largely a byproduct of a vibrant financial ecosystem where <keyword id="23140158" type="General" weightage="20" keywordseo="rbi-government" source="keywords">RBI, Government</keyword> and the Banks are working closely in unison in ushering in market reforms" said the report The report highlighted that India experienced minimal deviations from its inflation targets between 2021 and 2024, setting it apart from other global economies facing greater inflationary challenges. It added that during 2021-2024, India recorded one of the lowest deviations from its inflation targets, highlighting the effectiveness of its inflation control measures. This success, the report points out, is largely a result of coordinated efforts between the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (RBI) and the central government. "India had a largely successful inflation targeting regime. Compared to advanced economies like the USA, Germany" said the report. As per the report the synchronization of monetary and fiscal policies, particularly during the pandemic, played a key role in maintaining price stability. It also emphasized that India's pre-inflation targeting regime faced several challenges that hindered the effective transmission of monetary policy. These challenges included sustained fiscal dominance, the presence of a large informal sector, significant informal financing, and inefficiencies in how banks priced their loan products. "Effectiveness of monetary policy in India's pre-Inflation Targeting regime was constrained by several India specific factors that affected transmission of the policy impulses through the interest rate channel" the report added. However, one of the key arguments in the report is that the RBI's inflation targeting has anchored inflationary expectations, even as food inflation remains high. The notion that headline inflation should exclude food prices was dismissed as counterfactual by the report. According to the study, the RBI's success in targeting inflation, despite food price volatility, has prevented a spill-over from food inflation to core inflation. The report stressed that the RBI's consistent communication of its inflation target--set at 4 per cent--has been crucial in successfully anchoring inflation expectations. By reinforcing its commitment to this target, the RBI has helped stabilize inflationary trends across the broader economy. The SBI report reinforces India's effective monetary policy framework, particularly in light of the global inflationary pressures seen in advanced economies like the US and Germany.

India handled inflation much better than US, Germany and France: SBI Report

<keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>'s <keyword id="19998537" type="General" weightage="20" keywordseo="foreign-exchange-reserves" source="keywords">foreign exchange reserves</keyword> have surged to a record high, reaching a new peak of $ 666.85 billion, according to data from the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>). The data highlights an increase of $9.69 billion in just one week, as of 12 July, surpassing the previous high of $657.2 billion. The reserves have been rising intermittently for some time now. The RBI data reveals that India's <keyword id="20972687" type="General" weightage="20" keywordseo="foreign-currency-assets" source="keywords">foreign currency assets</keyword> (FCA), the largest component of <keyword id="20344433" type="General" weightage="20" keywordseo="forex-reserves" source="keywords">forex reserves</keyword>, rose by $8.3 billion to $585.47 billion. Additionally, <keyword id="19895579" type="General" weightage="20" keywordseo="gold" source="keywords">gold</keyword> reserves increased by $1.2 billion, reaching $58.66 billion. According to a recent RBI report, India's foreign exchange reserves are now sufficient to cover over 11 months of projected imports. In the calendar year 2023, the RBI added approximately $58 billion to its foreign exchange reserves. In contrast, in 2022, India's forex reserves declined by a cumulative $71 billion. Forex reserves, or foreign exchange reserves (FX reserves), are assets held by a nation's central bank or monetary authority, typically in reserve currencies such as the <keyword id="19949640" type="General" weightage="20" keywordseo="us-dollar" source="keywords">US dollar</keyword>, and to a lesser extent, the euro, Japanese yen, and pound sterling. The country's foreign exchange reserves last reached an all-time high in October 2021. Much of the subsequent decline can be attributed to the increased cost of imported goods in 2022. Additionally, the relative fall in forex reserves has been linked to the RBI's market interventions, to manage the uneven depreciation of the rupee against a surging US dollar. The RBI frequently intervenes in the market through liquidity management, including the sale of dollars, to prevent steep depreciation of the rupee. The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.

India's forex reserves hit record $666.85 billion, driven by surging gold and foreign currency assets

New Delhi [<keyword id="19895063" type="General" weightage="100" keywordseo="India" source="keywords">India</keyword>], May 19 (ANI): India's <keyword id="19998537" type="General" weightage="20" keywordseo="foreign-exchange-reserves" source="keywords">foreign exchange reserves</keyword> rose for the second straight week, by <keyword id="19944038" type="General" weightage="20" keywordseo="USD" source="keywords">USD</keyword> 2.561 billion to USD 644.151 billion in the week that ended on May 10, according to data shared by the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>). Preceding these two weeks, the forex kitty had seen three consecutive weeks of decline. The country's foreign exchange reserves had hit an all-time high of USD 648.562 billion recently. According to the latest data released by the Reserve Bank of India (RBI), India's foreign currency assets (FCA), the biggest component of the forex reserves, rose by USD 1.488 billion to USD 565.648 billion. <keyword id="20344434" type="General" weightage="20" keywordseo="gold-reserves" source="keywords">Gold reserves</keyword> during the week rose by USD 1.072 billion to USD 55.952 billion. India's foreign exchange reserves, which had reached an all-time high are sufficient to cover 11 months of projected <keyword id="19933566" type="General" weightage="20" keywordseo="imports" source="keywords">imports</keyword>, according to the Monthly Economic Review report of the Department of Economic Affairs under the Ministry of Finance, released lately. In the calendar year 2023, the RBI added about USD 58 billion to its foreign exchange kitty. In 2022, India's forex kitty slumped by USD 71 billion cumulatively. Foreign exchange reserves have risen about USD 23 billion, on a cumulative basis, in 2024 so far. Forex reserves, or foreign exchange reserves (FX reserves), are assets that are held by a nation's central bank or monetary authority. It is generally held in reserve currencies, usually the US Dollar and, to a lesser degree, the Euro, Japanese Yen, and Pound Sterling. The country's foreign exchange reserves last touched their all-time high in October 2021. Much of the decline after that can be attributed to a rise in the cost of imported goods in 2022. Also, the relative fall in forex reserves could be linked to the RBI's intervention, from time to time, in the market to defend the uneven depreciation in the rupee against a surging US dollar. Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the sale of dollars, to prevent a steep depreciation in the rupee. The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.

India's foreign exchange reserves rose by USD 2.6 billion in the week ending May 10: RBI

The wholesale price-based inflation eased for the third consecutive month in August to 12.41 per cent, on softening in prices of manufactured items, even as food items saw an uptick. The Wholesale Price Index-based inflation was 13.93 per cent in July and 11.64 per cent in August last year. August is the 17th consecutive month of double-digit wholesale price inflation (WPI). The WPI had touched a record high of 15.88 per cent in May, this year. Inflation in food articles in August rose to 12.37 per cent, as against 10.77 per cent in July. The rate of price rise in vegetables was 22.29 per cent during the month under review, as against 18.25 per cent in July. In the fuel and power basket, inflation was 33.67 per cent in August, as against 43.75 per cent in July. In manufactured products and oil seeds it was 7.51 per cent and (-) 13.48 per cent, respectively. The <keyword id="6354335" type="General" weightage="80" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword>) mainly looks at retail inflation to frame its monetary policy. Retail inflation has remained above the <keyword id="50847" type="General" weightage="80" keywordseo="reserve-bank" source="Orion">Reserve Bank</keyword>'s upper tolerance threshold of 6 per cent for the eighth month in a row and was at 7 per cent in August. To tame stubbornly high inflation, the RBI has hiked the key interest rate three times this year to 5.40 per cent. According to the central bank's projections retail inflation is likely to average 6.7 per cent in 2022-23. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/ibm-airtel-tie-up-to-power-indian-enterprises-in-5g-era/articleshow/94194678.cms">IBM, Airtel tie up to power Indian enterprises in 5G era</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/gadgets/news/vu-gloled-tv-launched-in-india-with-a-subwoofer-and-a-glo-ai-processor-at-a-starting-price-of-33999/articleshow/94194004.cms">Vu GloLED TV launched in India with a subwoofer and a Glo AI processor at a starting price of ₹33,999</a>

WPI inflation eased for the third consecutive month in August to 12.41%

<keyword id="495625" type="General" weightage="20" keywordseo="Indias-foreign-exchange-reserves" source="Orion">India's foreign exchange reserves</keyword> fell by $2.164 billion to $584.248 billion for the week ending April 21, according to data released by the Reserve Bank of India (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) on Friday. In the previous reporting week, the overall kitty had risen by $1.657 billion to $586.412 billion. Incidentally in October 2021, the country's forex reserves had reached an all-time high of $645 billion. In the period under review, the reserves fell mainly due to <keyword id="6499383" type="General" weightage="20" keywordseo="foreign-currency-assets" source="Orion">foreign currency assets</keyword> (FCAs) shrinking by $2.146 billion to $514.489 billion. The reserves have been declining as the RBI has used the funds to defend the rupee amid pressures caused mainly by global developments. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/ultratech-cements-q4-net-profit-falls-32-to-1666-crore-declares-dividend/articleshow/99848912.cms">UltraTech Cement’s Q4 net profit falls 32% to ₹1,666 crore, declares dividend</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/upcoming-new-cars-and-suvs-in-india-in-may-2023/slidelist/99842426.cms">Upcoming cars expected to launch in India in May 2023</a>

India's foreign exchange reserves fall to $584.24 billion

The Reserve Bank of India (RBI) has warned the public against a fake but identical website that apparently offers banking facilities and asks people to apply online to open an RBI savings account. 
 
“The website, rbi-inonline.org, has been created by some unknown persons,” the central bank said in a statement. It also warned the public ‘not to fall prey to spurious offers’ by the fake site. 
 
“The Reserve Bank clarifies that as India’s central bank, the Reserve Bank of India does not offer services offered by commercial banks, such as savings bank account, current bank account or credit cards. As such, the question of the Reserve Bank offering online banking services, as is indicated on the fake site, does not arise,” RBI said.

RBI Warns Against Similar-looking Fake Website

The <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>) has approved <keyword id="19895995" type="General" weightage="20" keywordseo="hdfc-bank" source="keywords">HDFC Bank</keyword>'s proposal to acquire an up to 9.5% stake in <keyword id="19901053" type="General" weightage="100" keywordseo="indusind-bank" source="keywords">IndusInd Bank</keyword>. "Pursuant to Regulation 30 of the <keyword id="35210" type="General" weightage="20" keywordseo="SEBI" source="Orion">SEBI</keyword> Listing Regulations, we would like to inform you that the Reserve Bank of India vide its letter dated February 5, 2024 has accorded its approval to HDFC Bank Limited ("applicant") for acquiring "aggregate holding" of up to 9.50% of the paid-up share capital or voting rights in IndusInd Bank Limited. The aforesaid RBI approval has been granted with reference to the application made by the applicant to the RBI," IndusInd Bank said in a stock exchange filing. The approval also stipulates that if the "aggregate holding" of HDFC Bank falls below 5%, prior approval of the RBI will be required to increase it to 5% or more of the paid-up share capital or voting rights. The RBI approval is subject to compliance with the <keyword id="19976511" type="General" weightage="20" keywordseo="banking-regulation-act" source="keywords">Banking Regulation Act</keyword>, 1949, RBI's Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies dated January 16, 2023 (as amended), provisions of the Foreign Exchange Management Act, 1999, regulations by the Securities and Exchange Board of India (SEBI), and other applicable statutes, regulations, and guidelines, the filing noted. --IANS sps/dpb

HDFC gets RBI nod to acquire 9.5% stake in IndusInd Bank

Economists are of the view that the measures taken by the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>) have controlled inflation and add that inflation will come down. A senior economist also said the headline inflation could be 7.5 per cent in December putting a spanner in the inflation projections of the central bank. The RBI's Monetary Policy Committee (MPC) will meet on November 3 to discuss what it would tell the Centre as to why it was not able to restrain the inflation within four per cent + or - two per cent for three consecutive quarters. The RBI may also sound out to the Central government as to the course of inflation as well as the reasons why it may be at elevated levels. India's central bank has been trying to contain inflation by increasing the repo rate -- the rate at which it lends to the banks. The central bank has increased the repo rate by 190 basis points in recent times and the last one was by 50 basis points. In India, the retail inflation rose to 7.41 per cent in September. "The measures taken by the government and RBI have been able to control inflation from the high of 7.8 per cent we had seen in April. The fall in global commodity prices has also been supported in containing inflation. Inflationary expectations have also come down," Rajani Sinha, Chief Economist, CARE Ratings Ltd told IANS. "However, the concern is the stickiness of core inflation above six per cent and the renewed surge in domestic food inflation in the last few months. The measures taken by RBI to control inflation will show further impact with a lag of a few quarters," she added. "There is a strong case for the RBI arguing that (a) inflation has primarily been caused by supply-side shocks with global commodity prices having an impact (b) rupee depreciation has added to imported inflation (c) the RBI on its part was proactive in raising rates even between two policies as it did in May when it saw things were going out of hand post-Ukraine war and (d) there have been some measures like increase in goods and services tax (GST) which has added to inflation that was happening in parallel," Madan Sabnavis, Chief Economist, Bank of Baroda, told IANS. "Therefore, there is an explanation as to why inflation was high. But the central bank has been acting to bring it down through its instruments, like repo and CRR (cash reserve ratio). It has succeeded in lowering surplus liquidity too which can be proved," Sabnavis added. "There was a huge sale of forex almost Rs 3 lakh crore to maintain the exchange rate. Inflation which was more than the target continuously for three quarters is estimated to come to around 6 per cent by three more quarters. Interest rates (repo rate) have increased by almost 1.9 per cent. As such the MPC may only be constrained to say that the present steps taken need some more time for having a positive impact to reduce inflation. This is subject to the time inconsistency impact," K. Ramasubramanian, retired General Manager, RBI, and a forex advisor told IANS. According to Sinha, the CPI inflation is estimated to inch below seven per cent in the next few months due to the base effect and below six per cent by the end of the fiscal year. Looking ahead, Sinha said the RBI could hike the repo rate further by 25-50 bps in the current fiscal year. "As we approach closer to the neutral policy rate, RBI will get more cautious in its rate decision," she added. Citing the unseasonal rain affecting the Kharif crops and the September food inflation at 8.4 per cent Dr Soumya Kanti <keyword id="4757" type="General" weightage="50" keywordseo="ghosh" source="Orion">Ghosh</keyword>, Group Chief Economic Adviser, <keyword id="6354731" type="General" weightage="50" keywordseo="state-bank-of-india" source="Orion">State Bank of India</keyword> said in 2019 when such rains happened, the average food prices more than doubled from 4.9 per cent to 10.9 per cent. Similarly, the headline inflation in December could be 7.5 per cent and could put a spanner to the inflation projections of RBI and market consensus, Ghosh said in a research report. "This could also mean that the terminal repo rate could still be difficult to comprehend at this time, though consensus puts it at 6.5 per cent," Ghosh said. According to Sinha, the <keyword id="6356435" type="General" weightage="50" keywordseo="us-federal-reserve" source="Orion">US Federal Reserve</keyword>'s policy decisions and the consequences on the currency market will also have a bearing on RBI's future policy decisions. Economists said the MPC will not be deciding on the policy rate at their November 3 meeting. "With global commodity prices falling and the likely support of base effect in containing India's CPI inflation in the next few months, RBI is unlikely to be in a tearing hurry," Sinha added. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/no-scientific-basis-to-two-finger-test-on-rape-survivors-causes-trauma-sc/articleshow/95198492.cms">No scientific basis to two-finger test on rape survivors, causes trauma: SC</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/iit-madras-generates-rs-1081-cr-from-funding-and-revenue/articleshow/95200293.cms">IIT Madras generates Rs 1,081 cr from funding and revenue</a>

RBI measures controlled inflation, but challenges remain say economists

The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>) can argue its case strongly with the Central government as to why the <keyword id="22195" type="General" weightage="20" keywordseo="inflation" source="Orion">inflation</keyword> was not controlled at 4 per cent, said experts. The RBI's Monetary Policy Committee (MPC) will meet on November 3 to discuss what it would tell the Centre as to why it was not able to restrain the inflation. The RBI may also sound out the Central government as to the course of inflation as well as the reasons as to why it may be at the elevated levels. In <keyword id="3658" type="General" weightage="20" keywordseo="india" source="Orion">India</keyword>, the retail inflation rose to 7.41 per cent in September. Experts were of the view that a combination of global and local (glocal) factors -- geopolitical developments, crop production, reduction in crude oil production and the resulting price increase and depreciating rupee -- are expected to heat up the prices. The RBI on its part is trying to contain the inflation by increasing the repo rate -- the rate at which it lends to the banks. The central bank has increased the repo rate by 190 basis points in recent times and the last one was by 50 basis points last month. "There is a strong case for the RBI arguing that (a) inflation has primarily been caused by supply side shocks with global commodity prices having an impact (b) rupee depreciation has added to imported inflation (c) the RBI on its part was proactive in raising rates even between two policies as it did in May when it saw things were going out of hand post Ukraine war and (d) there have been some measures like increase in goods and services tax (GST) which has added to inflation that was happening in parallel," Madan Sabnavis, Chief Economist, Bank of Baroda, told IANS. "Therefore, there is an explanation as to why inflation was high. But the central bank has been acting to bring it down through the instruments it has like repo and CRR (cash reserve ratio). It has succeeded in lowering surplus liquidity too which can be proved," Sabnavis added. "The RBI can say that inflation is due to supply side constraints a nd excess liquidity," says K. Ramasubramanian, retired General Manager, RBI, and a forex advisor. "In addition, there was a huge sale of forex almost Rs 3 lakh crore to maintain the exchange rate. Inflation which was more than the target continuously for three quarters is estimated to come around 6 per cent by three more quarters. Interest rates (repo rate) have been increased almost 1.9 per cent. As such the MPC may only be constrained to say that the present steps taken need some more time for having a positive impact to reduce inflation. This is subject to the time inconsistency impact," he added. The RBI has scheduled the November 3 meeting of MPC under Section 45ZN of the RBI Act. As per the said Section, when the RBI fails to meet the inflation target, it shall send a report to the central government listing: (a) the reasons for failure to achieve the inflation target; (b) remedial actions proposed to be taken by it; and (c) an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions. As per the RBI Act the MPC shall determine the Policy Rate required to achieve the inflation target. Further as per the RBI Act, the central bank shall organise at least four meetings of the MPC in a year. Announcing the credit policy RBI Governor Shaktikanta Das said: "There are also upside risks to food prices. Cereal price pressure is spreading from wheat to rice due to the likely lower kharif paddy production. "The lower sowing for kharif pulses could also cause some pressures. The delayed withdrawal of monsoon and intense rain spells in various regions have already started to impact vegetable prices, especially tomatoes. These risks to food inflation could have an adverse impact on inflation expectations." According to the RBI Governor, the Indian basket crude oil price was around $104 per barrel in H1:2022-23 and expected to be around $100 per barrel in H2: 2022-23. "Taking into account these factors, the inflation projection is retained at 6.7 per cent in 2022-23, with Q2 at 7.1 per cent; Q3 at 6.5 per cent; and Q4 at 5.8 per cent, with risks evenly balanced. CPI (consumer price index) inflation is projected to further reduce to 5.0 per cent in Q1:2023-24," Das said. However, one has to see the RBI's prediction as to crude oil prices ($100 per barrel) as the oil producing countries have announced a cut in their production and the international prices going up. Economists and common man have a different take on the RBI's expectations on inflation. "Presently inflation does appear unlikely that it will move downwards for two sets of factors. The increase in oil price and rupee depreciation has potential to increase imported inflation," Sabnavis had told IANS earlier. "Second, there have been some shortfalls in kharif production which will mean an increase in prices. Also the late withdrawal of rain has affected vegetable crops and also adversely affected the harvest of rice and oilseeds in some regions." The reduction in sown area for rice and pulses during Kharif season is expected to feed inflation in the coming months. The overall sown acreage for the Kharif season has declined by 0.8 per cent at the end of September 30, 2022 as compared to last year, the Bank of Baroda said in a recent report. "The inflation rate will be 6.5-7 per cent in FY23 and 5.5-6 per cent in FY24," Sabnavis had remarked. The RBI Governor had said the communication with the central government is a privileged one and it will not made public by the Bank. Das also said there no legal stipulation on the frequency of the communication between RBI and the government. He had earlier said the inflation rate is expected to come down to four per cent in two years time. There are many uncertainties. The RBI has pegged the inflation rate at 6.7 per cent for FY23. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/apple-surges-to-add-178-billion-in-market-value-as-4th-quarter-earnings-help-drive-a-turnaround-in-the-stock-market/articleshow/95153518.cms">Apple surges to add $178 billion in market value as 4th-quarter earnings help drive a turnaround in the stock market</a> <a href="https://www.businessinsider.in/stock-market/news/the-fed-will-hike-rates-too-far-and-tip-the-global-economy-into-a-recession-survey-of-economists-says/articleshow/95151308.cms">The Fed will hike rates too far and tip the global economy into a recession, survey of economists says</a> <a href="https://www.businessinsider.in/thelife/news/see-inside-an-almost-1-million-prefab-tiny-home-village-near-seattle-trying-to-solve-the-ongoing-homelessness-crisis/slidelist/95153993.cms">See inside an almost $1 million prefab tiny home village near Seattle trying to solve the ongoing homelessness crisis</a>

RBI can argue its case on inflation control say experts

The <keyword id="19949639" type="General" weightage="100" keywordseo="rupee" source="keywords">rupee</keyword> consolidated in a narrow range and <keyword id="20220719" type="General" weightage="20" keywordseo="depreciated" source="keywords">depreciated</keyword> 3 paise to close at its all-time low of 83.66 (provisional) against the US <keyword id="19904292" type="General" weightage="20" keywordseo="dollar" source="keywords">dollar</keyword> on Friday, weighed down by strong American currency and muted trend in domestic equities. <keyword id="19950258" type="General" weightage="20" keywordseo="forex" source="keywords">Forex</keyword> <keyword id="19993499" type="General" weightage="20" keywordseo="traders" source="keywords">traders</keyword> said weak domestic markets and elevated <keyword id="19900090" type="General" weightage="20" keywordseo="oil-prices" source="keywords">oil prices</keyword> pressured the rupee, however, likely <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) intervention prevented a sharp fall in the domestic unit. At the interbank foreign exchange market, the local unit opened at 83.64, and touched an intra-day high of 83.60 and a low of 83.66 against the dollar during the trading session. It finally settled at an all-time low level of 83.66 (provisional) against the American currency, registering a loss of 3 paise from its previous close. On Thursday, the rupee depreciated 5 paise and settled at a new low of 83.63 against the US dollar. "We expect the rupee to trade with a slight negative bias on weak global markets and a strength in the US Dollar. Weak Asian and European currencies may also weigh on the rupee," Anuj Choudhary — Research Analyst at Sharekhan by BNP Paribas — said. Choudhary said Foreign Institutional Investors (FIIs) inflows and any intervention by the RBI may support the rupee at lower levels. "USDINR spot price is expected to trade in a range of Rs 83.40 to Rs 83.90," he said. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.16 per cent at 104.33. Brent crude futures, the global oil benchmark, were trading marginally lower by 0.07 per cent at USD 85.05 per barrel. In the domestic equity market, the 30-share BSE Sensex tumbled 738.81 points to settle at 80,604.65 and Nifty dropped 269.95 points to 24,530.90. Meanwhile, the Asian currencies were all down after a fall in European currencies as the European Central Bank (ECB) kept rates unchanged in its meeting with a possibility of a cut in September, traders said. FIIs were net buyers in the capital markets on Thursday as they purchased shares worth Rs 5,483.63 crore, according to exchange data.

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