The Reserve Bank of India is watching the rupee's downslide in the foreign exchange market and will intervene when it is consistent with its policy, apex bank Governor D. Subbarao said here on Tuesday.
Talking to reporters, Dr. Subbarao said, “Our policy is to manage the volatility in the exchange rate and to ensure that the exchange rate movement doesn't impair our macro-economic stability.''
He said, “The exchange rate movement that we have seen in the last couple of weeks, particularly in the last 3-4 days, is being driven by global dynamics.
“And clearly, to what extent it moves and in which direction it moves will depend on credible resolution of the external situation, particularly the sovereign-debt problem in Europe.''
“So, we expect that the reverse adjustment will take place when the European situation will resolve itself. Till then obviously, I can't comment in real time about RBI intervening or not. But, we are watching the market. Of course, the RBI can intervene and will intervene when it is consistent with our policy,” Dr. Subbarao said.