Reserve Bank of India Deputy Governor Subir Gokarn comments on Switzerland’s central bank’s move to cap the franc’s gains. The Swiss National Bank yesterday imposed a ceiling on the franc of 1.20 versus the euro, the first such move in more than three decades, and pledged to defend the target with the “utmost determination.”
Gokarn spoke to reporters in Mumbai.
“Switzerland has decided that the burden of inflows as a result of the turbulence around them is putting pressure on their currency in a way that is disrupting their real sector. So they have decided to react.
‘‘The underlining view is that this is a transitory phase and this is not in any way an abandonment of their fundamentally floating exchange-rate system. It is an attempt to deal with temporary factors.
‘‘Our view on exchange rate management is essentially the same. We are looking to not target the exchange rate.
‘‘If there is pressure of any kind that disrupts the real sector we would consider intervention. We have not faced that situation so far, so our stance remains.’’