Bloomberg News

Gokarn Says RBI Can Take More Steps to Stabilize Indian Rupee

December 20, 2011

Dec. 20 (Bloomberg) -- Reserve Bank of India Deputy Governor Subir Gokarn comments on the rupee, shortage of money in the banking system and monetary policy. He was speaking to reporters in Mumbai today.

On rupee:

“Although it’s at 53, it has been relatively more stable, If you go by the intra-day volatility that was some weeks ago. That may reflect the fact that some of the measures that we have taken are helping to keep some boundaries on it.

‘‘These measures are not the only measures we have, there are other measures we can undertake to bring stability to this market and as the need arises we will use them.

‘‘But for the moment, in the aftermath of the several measures we have taken in two or three different rounds, clearly some degree of stability has returned and that’s important.’’

On money shortage:

‘‘The immediate pressure on liquidity is from advance tax collections, which are roughly about 690 billion rupees ($13 billion) last week. Obviously, that is going to be spent over a period of time. So, the current pressure is clearly short term.

‘‘But the quantity is reflective of the mismatch, we don’t expect this to remain. I think, things will normalize over the next few days.’’

On cutting interest rates:

‘‘‘We haven’t given any timeframe. We have been saying that under the current circumstances the next action will not be a hike. But we are not saying when that next action will be. We can’t make that commitment at this point.’’

--With assistance from Kartik Goyal in New Delhi. Editor: Abhay Singh

To contact the reporters on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net;

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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