Dismissing talks of probability of rupee touching 70 to a dollar in the near future, Chief Economic Advisor (CEA) Raghuram Rajan on Friday said the RBI, the government and SEBI are constantly watching developments in all markets and will take actions whenever necessary.
“You hear all these talks in the markets of rupee going to 70 against the dollar etc. Let me say that I don’t see any equilibrium analysis of rupee touching 70 to a dollar,” Mr Rajan said while delivering lecture at an award function.
“We don’t like exchange rate volatility, we do not like excessively weak rupee. And therefore the RBI, the government and SEBI are constantly watching developments in all markets, also in exchange markets and will take actions whenever necessary,” he added.
The rupee had touched an all time low of 61.21 against the dollar on July 8 after better-than-expected US jobs data raised concerns about the possibility of US Fed easing its stimulus programme.
Meanwhile, the rupee on Friday lost 18 paise to 59.85 against the dollar in early trade on the Interbank Foreign Exchange due to appreciation of the US currency against the euro and yen overseas.
Mr Rajan further said that the government and RBI have the instruments to ensure stability in the market.
“We have the instruments to ensure stability in the market. So again yes some weakness (rupee) has come as a result of external factors, but it is not to say that we are not watching the developments, and we will not take action as and when needed,” he said.
“Both the government and RBI have taken steps to contain gold imports, which is putting pressure on the Current Account Deficit (CAD). Measures have been taken to enhance FII inflows in addition to easing norms for domestic companies to raise fund from abroad,” he added
Recently, with an aim to help in government efforts to stem fall in rupee value, SEBI has tightened the exposure norms for currency derivatives to check large scale speculations in the market.
The Reserve Bank had also imposed restriction on banks with regard to trading in currency Futures and Options (F&O) with immediate effect on Tuesday to arrest the declining value of rupee.
The apex bank had also ordered state-owned oil companies to purchase their dollar requirement from a single public sector bank so as to curb volatility in the currency.