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Learn to live with current market volatility, says RBI

With the stock markets plunging by over 700 points on overseas cues, the Reserve Bank today said India will have to learn to live with volatility in the global economy.

business Updated: Aug 05, 2011 15:10 IST

With the stock markets plunging by over 700 points on overseas cues, the Reserve Bank on Friday said India will have to learn to live with volatility in the global economy.

"Markets go up and down because of various factors. We don't go into this. Situation is becoming more complex and volatile by the day. So you have to live with that," RBI deputy governor K C Chakrabarty told reporters on the sidelines of a function organised by JRE Group of Institutes.

The stock benchmark BSE Sensex crashed by over 700 points to slip below the 17,000 point level for the first time since June 2010, though it recovered later.

The sharp plunge on Indian bourses followed an overnight meltdown in the US market amid concerns that the American economy might slip into recession. Negative trends in Asian and European markets further added to the selling pressure on Indian bourses.

Asked if RBI is looking at any measures in wake of the crash, the deputy governor said the situation requires an analysis.

"We don't take day to day market reaction. May be after 45-days the RBI Governor will articulate about the policy. It is a matter of worry if something is happening. It requires detailed analysis," he said.

On reports of China diversifying its assets from the US treasury, Chakrabarty said "diversification is always there. People who have lend to the US cannot divert so easily. It is in the entire world interest that US economy should survive".