 "Zarin Daruwala, CEO, India, Standard Chartered Bank")
Zarin Daruwala, CEO, India, Standard Chartered Bank
A stable exchange rate fosters internationalisation by promoting cross-border flows, said Zarin Daruwala, CEO, Standard Chartered Bank India, on Friday.
“You need a very stable currency to promote cross-border flows, and we have seen that the rupee has been relatively stable in the last few years. And a relatively stable exchange rate enables internationalisation,” she said while speaking at the Global Fintech Fest.
The rupee was the third most stable Asian currency against the US dollar in the financial year 2023-2024 after the Hong Kong dollar and Singapore dollar, primarily due to timely intervention by the Reserve Bank of India. The rupee depreciated by 1.5 per cent over the year, against 7.8 per cent in the previous financial year (FY23).
Additionally, in the calendar year 2023, the local currency displayed remarkable stability against the dollar, marking the least volatility it witnessed in nearly three decades.
The India unit experienced a marginal depreciation of 0.5 per cent against the greenback. The last time the Indian unit exhibited such stability was in 1994, when it appreciated by 0.4 per cent.
Daruwala further said that another key factor for rupee internationalisation is the presence of deep financial markets, which support an international currency by enabling efficient hedging and investment. She said that India’s government securities market is both large and liquid, providing the necessary infrastructure for this process.
“The other enabler that you need for rupee internationalisation is an international currency which is aided by deep financial markets which allow for efficient hedging and investment. So, if we look at Indian government security markets, they are really large and liquid,” she said.
Additionally, she highlighted that it is crucial to establish offshore INR pools, which are essential for creating bilateral swap lines and facilitating international currency arrangements. She also said that the inclusion of Indian bonds in the J.P. Morgan Bond Index has fulfilled the need to provide investment avenues for other economies holding INR, ensuring they have opportunities to utilise and grow their holdings.
First Published: Aug 30 2024 | 7:24 PM IST
