Finance Minister P Chidambaram clarified that the recent measures of Reserve Bank of India (RBI) to contain depreciation of rupee has nothing to do with upcoming monetary policy review on July 30.
The central bank would release the first quarter monetary policy review 2013-14 on July 30.
His clarification comes after analysts interpreted the RBI’s recent move to raise interest rate on loan through its marginal standing facility by 2 per cent to 10.25 per cent as monetary tightening.
RBI also announced sale of bonds worth Rs 12,000 crore through open market operations to suck liquidity to check rupee slid.
Chidambaram said these measures are intended to check excessive volatility and speculation in the forex market. He said he does not expect banks to increase interest rates as a result of yesterday’s measures.
Admitting that there will be some depreciation of rupee in view of high current account deficit and inflation, Chidambaram said the value of domestic currency will be market determined and it will find its price.
These measures should not be read as a prelude to any policy rate changes. This has nothing to do with policy rate changes, the minister said while addressing media persons.
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