Industry Odisha Bureau, Jul 1: Flagging exchange rate volatility, energy price shocks and inflationary pressures due to the West Asia crisis, the Reserve Bank of India (RBI) reportedly released its bi-annual Financial Stability Report (FSR) yesterday.
As per media reports, the RBI’s FSR reportedly stated that, “India’s financial stability remains resilient despite risks to global financial stability amid the ongoing conflict. However, the economy remains exposed to energy price shocks and supply-chain disruptions because of its dependence on imported oil.”
Reportedly stating that, “the West Asia conflict and the consequent increase in global uncertainty have impacted emerging market economies like India through the financial channel,” the RBI’s FSR also stated that, “the Indian financial sector remained resilient amid a challenging global environment, supported by healthy capital ratios, comfortable liquidity buffers, and non-performing assets ratios at multi-decadal lows.”
The RBI’s FSR further stated that, “the exchange rate came under sustained depreciation pressure due to weakening of capital inflows and higher hedging demand from importers and investors. Notwithstanding sustained fiscal consolidation, government bond yields, especially at the longer end, came under pressure mainly reflecting geopolitical tensions and rising energy prices.”
The RBI’s FSR, however, reportedly warned that, “The Indian economy and the financial system remain susceptible to geopolitical tensions and associated shocks despite the receding tensions and an interim peace deal struck between the USA and Iran.”
