Re level reasonable: Jalan

MUMBAI, December 15: Reserve Bank of India governor Bimal Jalan on Monday flashed a signal to the foreign exchange market saying that the p...

MUMBAI, December 15: Reserve Bank of India governor Bimal Jalan on Monday flashed a signal to the foreign exchange market saying that the prevailing exchange rate of the rupee is quot;reasonablequot;. Softening the tough position taken just two weeks ago, Jalan said the RBI inspection of various banks operating in the forex market could not detect any violation of norms.

quot;From the economic and technical point of view, the current market determined8217; exchange rate is by and large reasonable, particularly in the context of the inflation rate,quot; Jalan said the rupee rate was Rs 39.55 when the governor addressed newspersons today. The governor added that controls on the forex markets would be relaxed only slowly as there was no violation of norms.

Reacting sharply to the Jalan8217;s view, the Indian currency lost ground to close at Rs 39.65/70 on hectic covering by importers as well as speculators towards the fag-end of the day. The rupee opened at Rs 39.44/46 to a dollar and veered around at Rs 39.55 during the official closing hours. It depreciated and closed at 39.65-39.70 after Jalan made the statement.

In the first week of December, the RBI Governor came down heavily on speculators saying that 8220;we would take any measures to defend the national interest8221;. He had also warned the corporates from taking advantage of the situation. 8220;Don8217;t take advantage of the situation to make a quick buck,8221; was his warning to speculators.

Changing this aggressive tone, Jalan said the central bank is satisfied with the exchange rate of Indian rupee against the US dollar. quot;We think those measures have been reasonably effective from a purely economic and technical point of view. We are generally satisfied that those measures were useful at a particular point of time,quot; Jalan said. Jalan, however, made it clear RBI has no quot;targetquot; for the exchange rate. quot;I have no target8230; I am not saying RBI will defend the rupee at certain level,quot; he said while putting across the RBI8217;s perception of the recent happenings in the forex market.

Singing a different tune, the RBI Governor said RBI inspectors could not detect irregularities in the foreign exchange operations of corporate houses and commercial banks. The RBI inspectors who were sent to various banks and corporate offices as part of the crackdown on speculators for creating havoc in the forex market did not come out with any concrete evidence against any of the market players. It may be recalled that FIEO president, Ramu Deora had asked the RBI to reveal the names speculators who violated norms instead of blaming the exporters.

Jalan, who refused to divulge any details about the investigation into speculative activities, said there was 8220;no violation of any RBI provision by banks.8221; The RBI investigation team was headed by the Deputy Governor S P Talwar who is heading the Department of Banking Operations and Development. Even in the past, the regulatory body has not published any of the inspection reports.