RBI Governor Raghuram Rajan on Monday made a strong case against any attempt to devalue the rupee to help exports and said such a move could fan inflation. The rupee’s value is “pretty reasonable,” he said, responding to a query on whether such a move would perk up exports.
Devaluation, he cautioned, may lead to a surge in inflationary pressures and “offset any benefits.”
PTI reports Mr. Rajan said that India had a long way to go to reach the per capita GDP level of China and needed many more years of sustainable strong growth.
“The issue of the value of the rupee is a complicated one. Some people think that to increase exports, the answer is devaluing the rupee,” the RBI Governor said.
“There are, strictly, ways of doing it (devaluation), but a lot of them require significant actions on the financial system that some of our neighbouring countries used for a long time,” he added.