At a press conference, Deputy Governor Rabi Sankar said that the Reserve Bank of India (RBI) is ready to handle any sudden changes in the exchange rate that might occur due to Donald Trump's presidency. Additionally, he rejected the idea of giving European authorities supervision over India's bond-clearing mechanism, calling it a breach of national sovereignty.
Rabi Sankar says changes in government leadership within the world's biggest and most powerful economy may cause short-term volatility in several markets.
He expressed faith in India's ability to control excessive volatility and any possible effects on the exchange rate. "In terms of our reserves, the health of the banking system, and the overall strength of the economy, we are well positioned to handle such challenges," Sankar said.
Sankar went on to say that higher interest rates could result from more U.S. debt issuance, which could affect India. He did, however, stress that this volatility can be reduced, especially given the expected capital inflows brought about by the inclusion of Indian bonds in the JP Morgan Index.
He added that India will also be included in the FTSE Russell indices. The U.S.'s actions on international tariffs and its budget balance management strategy will have a significant influence on the market, Sankar said.
In response to the European Securities and Markets Authority's (ESMA) demand for supervisory rights, Rabi Sankar adamantly declared that India would not abide by it since it would infringe upon its sovereign authority.
To enable European banks to trade government securities, ESMA has attempted to audit the books of the Clearing Corporation of India (CCIL), which acts as the trading platform. India, however, has refused to give this kind of authorisation.
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