RBI Advised to Let Rupee Depreciate Amid Oil Crisis The head of India’s Finance Commission, Arvind Pangariya, has urged the Reserve Bank of India (RBI) to stop intervening to prevent the rupee from falling to 100 against the US dollar. Pangariya argued that allowing the currency to depreciate is the appropriate response to the ongoing oil crisis, emphasizing that 100 is merely a numerical benchmark, akin to 99 or 101. He contended that the current depreciation is a necessary adjustment to the economic challenges posed by the oil shortage, which has led to significant pressure on the rupee. Pangariya’s comments come amid growing concerns that the rupee could breach the 100 level, a threshold that has become a focal point for market analysts and policymakers. While some experts have warned that the rupee might surpass this level, others have highlighted the RBI’s efforts to stabilize the currency. However, Pangariya dismissed these interventions as ineffective, stating that attempts to shield the rupee from depreciation would ultimately fail if the oil crisis persists. He argued that the right approach is to let the currency adjust naturally to the economic realities, rather than imposing artificial measures. Economists have echoed Pangariya’s stance, noting that the depreciation of the rupee is a practical response to the oil shortage. They explained that if the shortage is short-lived—lasting three months to a year—the rupee would remain weak. However, if the crisis extends over a longer period, the depreciation could lead to a gradual recovery. This recovery, they suggested, would depend on factors such as reduced oil import costs and increased foreign capital inflows into India.#reserve_bank_of_india #oil_crisis #arvind_pangariya #rupee_depreciation #finance_commission
