Amid rupee breaching the 55 levels spelling more troubles for Indian economy,RBI Deputy Governor Subir Gokarn today said the central bank will continue to take steps to stabilise the domestic currency.
“There is very strong pressure on the rupee to depreciate … we have done a number of things and will continue to do things that we think have an impact of stabilising the rupee,” Gokarn said while speaking on the sidelines of an event here this evening.
The rupee today fell to its life-time low of Rs 55.03 a dollar but RBI was conspicuous by its absence at the interbank foreign exchange bank market.
Gokarn said the rupee is coming under pressure due to high demand from oil companies and the widening current account deficit.
However,the key determinant for the rupee will be capital flows,Gokarn said.
The rupee has been one of the worst performing currencies in Asia and has been consistently hitting lows in the last fortnight,in spite of RBI interventions of selling the greenback to arrest the slide.
So far this year,the rupee has lost nearly 18 per cent on the back of a 22 per cent hit between August and December 2011.
Apart from the interventions from its USD 293-billion warchest,RBI has taken a slew of policy steps to increase flows including relaxing interest rates caps on non-resident deposits and asking exporters to convert half of their foreign currency earnings into rupee.
To a specific question if the RBI will create a separate window for oil companies to pay for their imports,as is being widely speculated,Gokarn said,”all measures are always being considered and their pros and cons are being weighed” and admitted that the demand from oil importers is “particularly strong” in today’s trading.
He,however,said there will be higher inflow of dollars tomorrow as the two-week window for exporters to convert their foreign currency earnings is drawing to a close the day after.
Stating that the RBI is conscious that the rupee slide is impacting many constituents in the system,Gokarn said there is no issue over access to dollars for corporates at present.
“I’m not aware of any concerns of access to dollars…Now it’s more a matter of pricing; access doesn’t seem to be that much of an issue,” he said.
On the growing deficit on the liquidity front-a result of the repeated interventions by the RBI,Gokarn said the central bank will be doing another round of government securities’ buyback or open market operations this week.
The RBI has pumped in over Rs 1.3 lakh crore through OMOs in the few months through OMOs to stem the liquidity deficits.