NEW DELHI, Jan 16: Finance Minister P Chidambaram expressed the confidence that the package announced by the Reserve Bank on Friday would provide considerable stability in the foreign exchange market.The measures have been drafted in the backdrop of continuous fall in the rupee against the US dollar.Meanwhile, RBI governor Bimal Jalan, when contacted by the newsmen, refused to make a comment but said that "measures will speak for themselves."According to the finance minister, the Indian rupee has come under some pressure, once again, in the last few days. "It is obvious that the turbulence in the South East Asian markets is spilling over into the Indian market", he said in a statement issued here.The RBI has maintained a close watch on the rupee's behaviour, he said adding, "I fully support the package. I believe that it will bring about a considerable degree of stability in the foreign exchange market."The finance minister said since April, the rupee had depreciated by 11 per cent in nominal terms. In comparison, the Singapore dollar, a strong currency, had depreciated 18 per cent. At the other end, the Indonesian Rupiah has depreciated as much as 72 per cent. Other currencies have also depreciated within this range.The Indian rupee has depreciated since June 1991 falling from Rs 21 to a US dollar to Rs 31.37 in 1993-94 and touching Rs. 37.95 to a dollar in February 1996 and crossing the level of Rs. 40 in the last few days. The minister said that the correction has taken place in the exchange rate of the Indian rupee which has to be seen in terms of real effective exchange rate (REER) indicators, which adjust for differences in inflation rate between India and its major trading partners. Chidambaram further added that the rupee had actually appreciated by about nine per cent by July 1997 if 1993-94 was taken as the base. Since July this year, the inevitable correction has taken place and the rupee has depreciated by the same order, he added.Despite the unprecedented South East Asian crisis, the correction in the real exchange rate of the rupee has been quite orderly, he said. The minister also stressed that the government's broad policy was to leave day-to-day exchange rate management to RBI and added that the RBI measures would ensure that the foreign exchange market remains orderly and stable. Chidambaram assured that there was enough foreign exchange resources to meet the genuine demands of importers. Also, through a number of measures, exporters were being encouraged to repatriate their earnings speedily to India, he added.
