The Reserve Bank of India's interventions in the foreign exchange markets are to maintain macro economic stability and the adequacy of forex reserves is always kept in mind, Governor Shaktikanta Das said in a policy speech on Friday.
The rupee is a free-floating currency, with a market-driven exchange rate, the governor said, adding that the RBI did not have a fixed exchange rate in mind and intervened only to curb excess volatility.
"The aspect of adequacy of forex reserves is always kept in mind," Mr Das added.
The RBI's actions have helped boost investor confidence, which is reflected in the return of capital flows since July, Mr Das pointed out.
The foreign exchange reserve of $537.5 billion as on Sept. 23 compared favourably with most peer economies, the governor highlighted.
However, the reserves are down more than $100 billion from the peak of $642.45 billion reached in September last year.
Almost 67% of the decline in reserves during the current financial year is due to valuation changes, Mr Das said.
The governor's remarks on the exchange rate and reserves comes on the heels of the rupee's swift decline against the dollar in recent session, including to a record low of 81.95.
The central bank has been selling dollars regularly to slow the pace of rupee's decline, traders have said.
The rupee on Friday was at 81.5450 per U.S. dollar, up from 81.86 in the previous session and almost unchanged from before Das announced the RBI's policy decision.
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