₹ decline poses no fundamental concern to economy: Mishra

‘The rupee’s sharp depreciation against the dollar in the past few weeks does not pose a fundamental concern and the Reserve Bank of India (RBI) will step in to contain volatility only if depreciation accelerates beyond a tolerable pace, according to Neelkanth Mishra, chief economist, Axis Bank, and head of global research, Axis Capital.

- ANJALI KUMARI

Mishra is also part-time member of the Economic Advisory Council to the Prime Minister.

The rupee breached 91 against the dollar on Tuesday, and it has touched new lows for the last four consecutive sessions.

Mishra said the rupee was expected to average around 90 by June next year and weaken further to 92 a year later, with the pace of depreciation depending on capital flows and the global risk appetite.

‘The RBI is expected to absorb excess capital inflows to rebuild foreign-exchange reserves, while any transition back toward a more freely floating exchange-rate regime is likely to be gradual, a report by Axis Bank, authored by Mishra, stated.