India cenbank governor’s comments at World Economic Forum in Davos

By una galani and Peter Thal Larsen

MUMBAI (Reuters) -The Reserve Bank of India would like to see inflation come down to 4% on a durable basis before it is ready to pivot on monetary policy, Governor Shaktikanta Das said in an interview with Reuters at the World Economic Forum in Davos.

Following are the excerpts from an interview with Das, which have been edited lightly for clarity.


“When inflation is still above 5.5%, in fact closer to 6%, our monetary policy has to remain actively disinflationary and it would be too premature to talk in terms of a pivot in our monetary policy.”

“So far as core inflation is concerned, which is non-oil non-gold and is largely impacted by monetary policy…that has moderated to 3.8%. So that gives us the satisfaction that monetary policy is perhaps more key.”

“Unless inflation reaches 4% on a durable basis, just one number in a particular month we should not get misled by…it should not put us into any kind of complacency. So we want to see headline inflation reaching 4%.”


“Our intervention in the currency market is to contain, is to limit, is to check excessive volatility in the exchange rate. Other than that, the exchange rate of the rupee is very much market determined. It is a freely floating currency, we don’t have any particular level of the rupee exchange rate versus the dollar.”


“Our stated policy is that we want to build up forex reserves because we don’t want a repeat of the experience during the taper tantrum”.


“A large part of the capital account is already convertible… to make it fully convertible, it’s a process.. it’s not a target, it’s not a milestone. We see it as a process.”


“We don’t have a specific percentage in mind. But the way we look at it is that global trade should not depend just on one currency for trade settlement because if the entire global trade is based on one currency, the risk is that much more.”

“Our current focus is to basically discuss rupee-denominated trade with our trade major trade partners… All that we are trying to do is to try and have the presence of rupee for settlement of our trade with our major trading partners.”


“We keep on monitoring it from the systemic point of view. At the moment, whatever is the limit, we are quite comfortable… There’s still a lot of space available for foreign investors particularly in the portfolio side to bring in money.”

(Reporting by Peter Thal Larsen and Una Galani in Davos; Editing by Ira Dugal and Arun Koyyur)