Parul
Reserve Bank of India (RBI) has said that in 2022-23 the domestic financial market movements remained orderly, notwithstanding the persisting impact of global spillovers during the year.
“Relentless strengthening of the US dollar and aggressive tightening of monetary policy by the US Fed impacted portfolio flows, as in other emerging markets economies (EMEs),” the central bank said in its annual report for 2022-23, released on Tuesday.
It further said that the Indian equity market exhibited signs of decoupling on sustained support from domestic institutional investors, adding that the rupee exhibited orderly adjustment with lower volatility relative to many other EMEs.
“The money market trends moved in alignment with the tightening of policy rate cumulatively by 250 bps and the change in policy stance towards the withdrawal of accommodation,” it said.
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Going forward, financial markets will be conditioned by the domestic macroeconomic outlook as also the future path of US monetary policy and the strength of the US dollar, the RBI concluded.
Commenting on prospects for 2023-24, the RBI said in its annual report that the GDP growth for the current fiscal is projected at 6.5 per cent.
“Taking into account softer global commodity and food prices, good rabi crop prospects, sustained buoyancy in contact-intensive services, the government’s continued thrust on capex, higher capacity utilisation in manufacturing, double-digit credit growth, receding drag on purchasing power from high inflation and rising optimism among businesses and consumers, real GDP growth for 2023-24 is projected at 6.5 per cent with risks evenly balanced,” it said.
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“Inflation risks have moderated with downward corrections in global commodity and food prices and easing of the pass-through from high input cost pressures of last year,” it added while commenting on the price rise.
“With a stable exchange rate and a normal monsoon – unless an El Nino event strikes – the inflation trajectory is expected to move down over 2023-24, with headline inflation edging down to 5.2 per cent from the average level of 6.7 per cent recorded last year,” the annual report said.
