- Jaitley makes pitch for investment, says India a ‘safe haven’
- India central bank to provide appropriate amounts of liquidity
Indian markets should see “calm re-emerging" a few days after Brexit, according to central bank Governor Raghuram Rajan.
The central bank will provide appropriate amounts of liquidity where needed to smooth volatility, Rajan told ET Now news channel on Friday. The Reserve Bank of India is in touch with domestic and international authorities, he said.
“The volatility will hit us, but as the markets and investors wake up a few days later after the turbulence they will judge where it makes sense to invest," Rajan said. “You have to put your money somewhere, and we should see calm re-emerging."
India’s rupee, already Asia’s worst-performing currency this year, headed for the biggest decline since 2013 as the U.K. voted to leave the European Union. The currency also fell earlier this week when Rajan said he would exit after his term ends in September.
Finance Minister Arun Jaitley pitched for Brexit-spooked investors to put their money in India, touting macroeconomic fundamentals including “a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation."
“As investors look around the world for safe havens in these turbulent times, India stands out both in terms of stability and of growth," Jaitley said in a statement on Friday. World-beating economic growth, a healthy reserve position and sound macro-economic fundamentals underpin India’s attractiveness, he said.
Jaitley said that India is “well prepared" to deal with Brexit and would work with the central bank to smooth any volatility and minimize its impact on the economy. He also pledged to “steadfastly pursue our ambitious reform agenda," including the early passage of a goods-and-services tax that has been stalled in parliament since last year.
Since Rajan took office in 2013, the former International Monetary Fund chief economist helped strengthen the rupee, cut its swings by more than half and propelled the nation’s foreign-exchange reserves to an all-time high. Those moves have helped India remove itself from the so-called “Fragile Five” currencies which also included South Africa’s rand, Indonesia’s rupiah, Turkey’s lira and Brazil’s real.