New Delhi, Feb 8 (PTI) Reserve Bank Governor Sanjay Malhotra on Saturday said that the market forces decide the value of rupee with respect to the US dollar and the central bank is not worried about day-to-day movement of the currency value.

Addressing the media after the meeting of Finance Minister Nirmala Sitharaman with the Reserve Bank board, Malhotra said that the central bank focuses on the value of the rupee in the medium to long term.

On the impact of the depreciation of the rupee against the US dollar on price rise, the Governor said 5 per cent depreciation impacts domestic inflation to the extent of 30-35 bps.

He further said that RBI took on board the current rupee-dollar rate while working out growth and inflation projections for the next financial year.

Replying to a question, Finance Minister Sitharaman said the Union Cabinet has cleared the new income tax proposal and she hopes to have it introduced in the Lok Sabha in the coming Week.

Thereafter it will be sent to a parliamentary standing committee. PTI DP NKD CS NKD MR

Market-determined currency value: central bank monitors medium-term stability and says daily rupee swings are not a concern. The Governor said market forces set the rupee US dollar rate and the central bank is not concerned with day to day fluctuations, focusing on medium to long term value. He stated that currency depreciation has a measurable but limited impact on domestic inflation and that the RBI used the current exchange rate in preparing growth and inflation projections for the next financial year. Separately, the Finance Minister said the Union Cabinet cleared a new income tax proposal to be introduced in the lower house and sent to a parliamentary standing committee.