RBI Dy Governor tries to allay concerns over market, rupee

S S Mundra reiterated that despite the slide in markets and rupee since Monday, the country was on the right path of reforms

Reserve Bank of India Deputy Governor S S Mundra on Tuesday sought to allay concerns over the slide in markets and rupee, saying that these were repercussions from global events and that India was on the right path.

“I would believe that in medium to long term we are on the right path. The reform agenda is progressing in the right direction,” Mundra said.

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“Having said that we have always been telling that we are the stage where we cannot be disconnected from the global events. We are inter-connected markets and there would be occasion when these kinds of things will happen but I think the solution is the right mix of the medium and long term policies,” he added.

The rupee has been weakening and the depreciation gained momentum after China devalued its yuan. Mundra said the RBI would ensure that there is no undue volatility in the currency market.  

Yesterday RBI governor Raghuram Rajan had also assured the Street that the central bank would not hesitate to use foreign exchange reserves to reduce volatility.

“We have approximately $380 billion in reserves to be used as and when the need arises. We will have no hesitation in using our reserves when appropriate to reduce volatility in the rupee,” Rajan said at FIBAC 2015.

RBI has about $355 billion foreign exchange reserves and another $ 25 billion in forward purchases.

“These are not required until next year to meet foreign currency FCNR (Currency Non-Resident Account) liabilities,” the RBI chief said. Rajan added that once market volatility settles down, India should emerge once again as an investment destination of choice.