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India Will Take Steps to Steady Rupee as Warranted, Rajan Says

Raghuram Rajan, the top adviser in India’s Finance Ministry, comments on the rupee after the currency tumbled to a record low against the dollar today.

On volatility:

“The Finance Ministry, Reserve Bank of India and Securities and Exchange Board of India are watching developments closely and will take action when appropriate. We are not short of actions and instruments if and when the need arises.

“We would prefer a more stable rupee and are prepared to take actions to reduce volatility as and when needed. We have a range of possibilities and will take action when warranted. As and when needed we will call upon them.

“Intervention decisions are made by the RBI and they typically don’t flag them in public. I think they will take actions as appropriate. The Finance Ministry is always in contact with the RBI.

“FII debt flows have been affected by the possible rise in U.S. long-term interest rates. This has affected the rupee as it has affected the currencies of many other emerging markets. Markets may be overshooting, as they tend to do at times like this.”

On gold imports:

“All the data we have suggest gold imports have come off quite substantially since last month. There is no need for knee-jerk reactions. I think on the current-account side, June will look a lot better than May.”

On inflation:

“The impact that analysts calculate is that 10 percent depreciation in the rupee feeds into a 1 percentage point increase in inflation. With the economy relatively weak one could anticipate that some of that may not be passed through into higher inflation. But, clearly, a strong rupee depreciation has some inflationary impact and we are clearly aware of that.”

To contact the reporters on this story: Tushar Dhara in New Delhi at; Siddhartha Singh in New Delhi at

To contact the editor responsible for this story: Stephanie Phang at

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