HindustanTimes Sun,28 Dec 2014

Will intervene if forex turns volatile: RBI

HT Correspondent, Hindustan Times  Mumbai, October 16, 2012
First Published: 22:18 IST(16/10/2012) | Last Updated: 22:19 IST(16/10/2012)

The Reserve Bank of India (RBI) will intervene in the foreign exchange market if there is extreme volatility in the exchange rate.


“(When) there are situations where there is extreme volatility... we have intervened in the past,” said HR Khan, deputy governor, RBI. “If there are cases of extreme volatility, we will intervene in the future also.”

He further said that the stated policy of the central bank is not to intervene in the forex market and let the market forces determine the exchange rate.

Referring to the steps taken to check volatility in the domestic currency, Khan said: “We have taken both tactical and strategic measures. Government has also taken some steps.”

Rupee, which has strengthened to R52 level in the recent past, has shown some weakness in the last two trading sessions and breached Rs. 53 level on Monday after wholesale price index (WPI) based inflation rose to a 10 month high of 7.8% for September.

Khan also said that the monetary and fiscal policy have to move in tandem. He also said that the fiscal deficit is one of the major concerns in the current situation and it should be brought under control. He said the supply side response is required for inflation management.

more from Banking

CCEA gives nod for IDFs to take over bank loans

In a move that could boost the cash-starved infrastruc­ture sector, the Cabinet Committee on Economic Affairs on Tuesday gave its clearance for infrastructure debt funds (IDFs) to take over existing bank loans.
Most Popular
Copyright © 2014 HT Media Limited. All Rights Reserved