By IANS,
Kolkata: Expressing concern over the recent rupee depreciation, the country’s apex bank Thursday said it will take whatever measures were needed to check the fall of the currency.
“The rupee depreciation in the last three months is a concern. It is the result of developments outside the country. Because there are no inflows coming in a significant way, there has been weak rupee exchange rate as determined by the forex market,” Reserve Bank of India (RBI) Governor D. Subbarao told mediapersons here.
The rupee has depreciated about 14 percent this year, making it the worst performer among Asian currencies.
To improve the situation, Subbarao said, the foremost task would be to attract more flows to prop up the rupee.
The apex bank has raised the interest rate ceiling in deposits held by overseas Indians in both the rupee and the foreign currency and also eased overseas borrowing rules for local corporates by raising the ceiling for the interest that the firms can pay.
“Whatever else we need to do (to attract more flows), we will do,” he added.
On RBI’s intervention in the forex market, the governor said: “In order to determine whether we should intervene or not, our guide is our policy. We would intervene in the market only to manage volatility (in exchange rate) and macro-economic instability.”
Subbarao said there are liquidity constraints across the system “and for certain banks” and promised to take appropriate measures to improve the situation.
Asked about speculation that the apex bank would cut Cash Reserve Ratio (CRR) to improve liquidity, Subbarao said: “Market is anticipating something. That is for the market. But I cannot react to what market is expecting outside the context of our policy.”
“So whatever we might decide on CRR or otherwise, you will have to wait for the mid-quarter statement,” he said.
RBI will announce its mid-quarter policy review Dec 16.