Rupee fall: RBI to intervene in forex market only to curb volatility,says Subbarao

He was delivering a lecture organised here by Institute of Public Enterprise.

Subbarao said: 8220;The important point is that we have to be internally sure that when we enter market we are credible because for a central bank failed defence of exchange rate can be quite detrimental.

8220;When you have downward pressure on the rupee as I said you have to shell your dollars. And a fair defence of the exchange rate can be worse than no defence.8221;

The rupee weakened below 57 to the dollar today to approach a record low hit about a year ago. It was trading at 57.06/07 to the dollar. The Indian currency had hit record low of 57.32 against a dollar in June last year.

On the widening Current Account Deficit,Subbarao said there are three concerns about India8217;s CAD. These are quantum of CAD,quality of CAD and financing the CAD.

The increase in the deficit above the sustainable levels year-on-year is certainly going to add the pressure,he said.