As the Indian currency moved closer towards the Rs.50 to-a-dollar mark, Finance Minister Pranab Mukherjee on Thursday said the Reserve Bank would intervene in the foreign exchange market “as and when the situation warrants''.
However, “right now, there is no such situation,” he told reporters here, after meeting leading Indian industrialists at an investment forum. “The RBI Governor has made it quite clear that as and when the situation warrants, the RBI will intervene. Right now, there is no such situation,” Mr. Mukherjee said.
In the midst of risk aversion by global investors in the emerging stock markets, the rupee has lost value sharply against the U.S. currency. While a weak rupee helps exporters, it poses a serious problem for a country which meets over 75 per cent of its crude oil requirement through imports. The landed cost of imports becomes expensive, as the local currency loses value against the U.S. dollar.
Mr. Mukherjee pointed out that the international environment was an “area of concern”, particularly the high ratio of sovereign debt to the GDPs of eurozone nations and the slow pace of recovery in industrialised countries.
Inflationary pressure and forex volatility in emerging markets were posing serious concerns, he added.
