The US Federal Reserve yesterday surprised the markets by saying it will continue with its monthly $85 billion bond buying programme and wait for more evidence of growth recovery. Expectations that the stimulus programme would be tapered had led to fears of capital outflows, causing the rupee to depreciate against the dollar and stocks to fall.
"I think we will need to continue to deepen our own reform process so that we continue to strengthen the economy. We believe with the steps that the government has taken, the economy will continue to show signs of growth and that is what is going to strengthen the rupee and strengthen the markets," Mayaram said.
The government has taken steps to revive investments and promote exports and manufacturing as it battles slowing economic growth and seeks to contain the fiscal and current account deficits. To attract dollars and stem the rupee's decline, the RBI opened a currency swap window for oil refiners and a special concessional window to swap foreign currency non-resident (FCNR) deposits.
Stocks and the rupee shot up after the US Fed decision.
The S&P BSE Sensex rose as much as 605 points, or 3.03%, to 20,567.61, while the rupee jumped 158 paise to a one-month high of 61.80 against the dollar.