RBI may take steps to prevent rupee’s downward spiral

December 3rd, 2011 - 8:23 pm ICT by IANS  

New Delhi, Dec 3 (IANS) The Reserve Bank of India (RBI) may intervene in the currency market to prevent the downward spiral of the rupee.

“Usually RBI does not strongly intervene in the currency market to achieve specific exchange rate targets. However, in volatile market conditions that we see today, RBI intervention to keep markets orderly and prevent a downward spiral of rupee is justified,” RBI deputy governor Subir Gokarn said in a video message to a Confederation of Indian Industry (CII) event in Mumbai Saturday.

“Our broad objective in such intervention is to ensure that we find a balance between the short term risk of the rupee spiralling downward and the medium term risk of a loss of confidence in our ability to meet our external obligations,” he added.

The Indian rupee has depreciated sharply in the last one month. It hit a record low of 52.73 against the US dollar Nov 23.

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