The Reserve Bank of India (RBI) Governor, Raghuram Rajan, said here on Tuesday that the central bank was watching the Iraq situation very closely and domestic economic conditions were conducive to deal with any shocks in the external front.

“I think as far as the external front goes, we are in a much better position than we were last year,” said Dr. Rajan while talking to reporters on the sidelines of State Bank of India Banking Conclave 2014, here.

“We have sufficient reserves. The current account deficit is low. So I think one shouldn’t worry too much about the external side at this point,” he added.

The geopolitical situation in the strife-stricken Iraq and the spike in crude oil prices once again led to volatility in the Indian currency, as it exhibited weakness against the US dollar in the foreign exchange markets.

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