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It was a call from economic affairs secretary Arvind Mayaram on Saturday to the 18th floor of Reserve Bank of India (RBI), which made governor Duvvuri Subbarao to cancel his entire public engagement programme in Mumbai and rush to Delhi to meet the finance minister and the prime minister on Monday.
The meeting, which will be to discuss measures like sovereign bond issue to save the weakening rupee, is scheduled late afternoon.
Subbarao was scheduled to deliver keynote address at a Seminar on financial inclusion at Maharshi Dayanand College of Arts, Science & Commerce at Parel in central Mumbai and then was scheduled to attend another function at VES Engineering College in Chemmbur.
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Both finance minister P Chidambaram and Mayaram was in the United States last week to talk up India to American Business while finance ministry’s chief economic advisor Raghuram Rajan was interacting with bankers for the possibility of sovereign bond issue.
The measures were discussed to attract capital flows in the country to save the weakening rupee. In the past on several occasions the country has floated sovereign bonds to tide over the balance of payment crisis. The finance ministry has also sounded some banks for prepare for such an issue.
The country’s high current account deficit has weighed on rupee which is worst performing Asian currency since the start of the financial year. Since April the rupee has depreciated 10.5% against the dollar. Concerns that the US Fed will taper its asset purchase programme, known as Quantitative Easing (QE) 3, has also led foreign investors pull out from emerging markets including India, which has also put pressure on the currency.
According to sources, the finance ministry wanted to discuss Subbarao’s views and how to go about the sovereign bond issue before governor leaves for London to deliver a lecture at the at European Economics and Financial Centre on 17 July.
From London, Subbarao will head for the G20 Finance Ministers & Central Bank Governors’ Meeting at Moscow on 19-20 July. Urjit Patel, Deputy Govenor of RBI looking after the monetary policy department will also accompany the governor.
