Reserve Bank of India governor Raghuram Rajan said he was not too worried about the current valuations for the rupee even as the currency has fallen to its lowest since 2013, while adding the central bank stood ready to intervene in futures markets.
Rajan also said on Tuesday that a deliberate weakening of their currencies by other countries - a concern given China’s recent moves to devalue the yuan - would not affect the RBI’s stance.
“I’m not too worried about the value of the rupee at this current juncture,” Rajan said in a briefing with domestic and foreign news agencies, adding the RBI only stepped in to prevent excessive moves up or down.
“We don’t have a policy of deliberately targeting the value for the rupee,” he added. “We have intervened in the last few months on both sides of the market and we continue do so, but we don’t pick a level and say we need to go there because others have moved.”
The rupee has fallen 2.7% against the dollar this year to its lowest since September 2013 when the currency was in the midst of its worst crisis in more than two decades as concerns about slumping crude prices and China’s economy have hit emerging markets.
Rajan added the RBI stood ready to intervene in futures markets, after the central bank last month said it would be ready to do so as part of its foreign exchange management strategy.
“To be as effective as possible we want to make sure we have the capacity. Not that we will use every one of those instruments. This is increasing the toolset rather than changing the stance,” he said.
Turning to banks, Rajan said its deadline for banks to clean up their bad loans was a soft one, and the central bank was working with the sector rather than imposing tough conditions.
“The extent to which provisioning finally has to be done is sort of a moving target,” he said.