CB keeps...

The CB stressed that external sector remains resilient with improved liquidity in the foreign exchange market, particularly with the settlement of US$1 billion sovereign bond, which matured early this month.

The depreciation of the rupee against the US dollar was contained to 1.5 percent thus far during the year with the exchange rate remaining stable. The CB noted that it would continue to purchase foreign exchange from the domestic market. Further, the CB pointed out that the improvement in earnings from merchandise exports, restrictions imposed on the importation of non-essential goods and low crude oil prices helped narrow the trade deficit substantially while containing the current account deficit so far during the year.

Moreover, it was noted that services exports (excluding the tourism sector) continued to record a healthy growth rate led by computer and logistic services related activities while workers’ remittances continued to record a notable acceleration since June 2020.

The country’s gross official reserves were estimated at US$ 6.7 billion at the end of September, providing an import cover of 4.6 months.

Meanwhile, the CB also believes that the current uptick seen in the National Consumer Price Index (Ncpi)-based headline inflation driven by food prices to be temporary.

“The recent increase in food prices is expected to be short-lived supported by domestic supply side developments as well as the recent reduction in prices of several essential goods. Accordingly, inflation is expected to remain broadly within the desired range of 4-6 percent in the near term and over the medium term with appropriate policy measures,” it stated. The CB stressed it would continue to monitor domestic and global macroeconomic and financial market developments and take further measures appropriately to ensure the economy promptly reverts to a sustained high real GDP growth path, while containing inflation in the 4-6 percent range under its flexible inflation-targeting framework.