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.”
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“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.