RBI governor says the sharp decline in Rupee value is due to external factors

Syed Akbar
Hyderabad, Nov 22: Reserve Bank governor D Subbarao blamed the sharp
decline in Rupee on external factors like the debt crisis in European
countries, but the RBI is yet to take a decision whether to intervene
in the forex market to protect the Indian currency from further
slipping against the US dollar.

Subbarao, who was in the city to participate in an agricultural
management conference, told reporters on Tuesday that it was a matter
of concern that the Rupee had been declining in the last two week. “We
are watching the European market. At the moment, we can’t say
anything,” he pointed out adding that the exchange rate is driven by
the global dynamics.

Linking the decline in Rupee to the sovereign debt problem in Europe,
Subbarao declined to comment whether the Indian currency will
stabilize or decline further. “It depends on credible resolution of
the external situation,” he said. The RBI’s intervention, if any, will
be purely based on its policy.

"Our policy is that if the macro-economic situation is impacted due to
the exchange rate fluctuation or undue volatility we will have to
intervene. We are yet to decide whether to intervene or not at the
moment," Subbarao observed.

Continuing its decline against the US dollar, Rupee hit an all-time
low of Rs 52.73 against US dollar on Tuesday morning.