The Man Who Talked The Rupee Down

Ask outgoing Reserve Bank of India (RBI) deputy governor Yaga Venugopal Reddy what his most difficult moment at RBI was and he'll think, but won't reply. But ask him what his most important moment at the central bank was and he promptly says the 1997 Goa speech.

"This was the first time the central bank talked the market. The RBI wanted to convey a message and see how the market reacted," he says. Was the purpose served? Did he anticipate the sharp fall of the rupee that followed his frank admission that the currency was over-valued? Mum's the word on that.

Reddy is equally noncommital when asked about trying times at the RBI. Theoretically, political uncertainties are what the central bank is wary of because they influence the market. "Whenever there is political uncertainty, we are on our toes. And this has happened so many times during my time here," he says frankly.

The three things the central bank is most careful about are the conditions of the market, the contagion and the interests of depositors.

"As a fallout of any event, first we see whether the markets are affected, then whether there is any contagion and, finally, how safe depositors are," he says, sipping tea without milk and sugar.

Reddy had walked in half an hour late at the informal tea party he threw for the media today at the 25th floor at the central bank's headquarters on Mint Street. He apologised profusely for the delay and promised to talk at a "greater speed to make good the lost time." That's quintessential Reddy -- a man who can talk the rupee down keeping a completely straight face.

Reddy tells the media he's not willing to give any "exit" interview. After all, being the deputy governor he has only been "a messenger," conveying the message of the RBI board and of governor Bimal Jalan.

"Should we start with tea, coffee or a handshake," he asks the dozen-odd financial journalists circled around him. He then proceeds to shake their hands.

On August 5, he will leave for Washington to become executive director at the International Monetary Fund (IMF). Does he have any views on the IMF's role in the Indian context?

"Philosophically, I am against any debt. Borrowing from the IMF, or for that matter anybody, is bad," Reddy said, biting into a vegetable pattice.

His six-year stint at RBI, Reddy acknowledged, was his longest posting at one place in his career. A 1964 batch Indian Administrative Service officer, he was transferred eight times in his first four years. And he spent the bulk of his time drawing up plans for the finance and planning departments in his state, Andhra Pradesh. He spent six years at the Centre, over a period of time.

"I must be putting on weight. This is the first party I am throwing. So far I have been eating only at parties thrown by others," he says. Last weekend he was in Hyderabad eating at parties thrown by his friends and everybody was happy that he would "have a home in Washington". Today, he was the perfect host, handing over plates to everybody.

This afternoon, RBI admiminstrative officials came to his room to claim the deputy governor's identity tag. Reddy asked them to come in the evening. "It's 5.15 and they might be waiting for me in my cabin," Reddy said after the journalists were through with their tea.

"Once I take up my new assignment, I will have a lot of time for you but you may not find time for me. That will be a different job," the deputy governor said. To illustrate the point, he joked: "Do you know how they manage sitting arrangements in a small aircraft when VIPs are aboard? Once I asked and got the answer: the people who matter don't mind (any sitting arrangement) -- the people who mind don't matter." For the pink press, YV Reddy will always matter.