RBI maintaining close vigil, will take all necessary steps, says Rajan

He said markets are trying to factor the consequences of Brexit, which has already led to sharp corrections in financial markets.

June 24, 2016 12:38 pm | Updated November 17, 2021 05:00 am IST - New Delhi

Reserve Bank of India governor Raghuram Rajan stepped in to calm the financial markets which turned volatile after Britain decided to leave European Union.

In a statement, Dr. Rajan said, "The Indian economy has good fundamentals, low short term external debt, and sizeable foreign reserves. These should stand the country in good stead in the days to come."

The BSE Sensex tanked over 1000 points while rupee went past 68 to a dollar in early trades as Britain's exit became certain.

"It looks increasingly clear that the United Kingdom has voted to exit the European Union. Markets are trying to factor the consequences of this development and this has already led to sharp corrections in financial markets around the world," Dr Rajan said.

While equity markets remained choppy, the rupee was off day's low as state run banks sold dollars on behalf of the central bank.

"Reserve Bank is continuously maintaining a close vigil on the market developments, both domestically and internationally, and will take all necessary steps, including liquidity support (both dollar and INR), to ensure orderly conditions in financial market," Dr Rajan said.

Dr. Rajan, in a concall with the media's from Switzerland, said the rupee has behaved well as compared to many other currencies and after the initial worries of Brexit, money should return here.

"At these times it is important to remember that India is less exposed to the external sector as compared to many other countries. To some extent we are not a significant commodity exporter."

"The economy itself is on a stronger growth path than elsewhere and after the initial concern of Brexit, people will look around for places that are relatively less affected. We stand out as a reasonable prospect and after the initial concern, money should return here," he added.

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