Gokarn was speaking at the annual conference of Federation of Indian Chambers of Commerce and Industry (FICCI) in Mumbai. The Reserve Bank of India (RBI) will consider intervention in the foreign exchange market only if there is a danger of currency fluctuations adversely affecting the markets and the economy, Subir Gokarn, a Deputy Governor in the central bank said on Wednesday. Gokarn was speaking at the annual conference of Federation of Indian Chambers of Commerce and Industry Gokarn was reacting to questions on Switzerland central bank’s move on Tuesday to cap the franc’s gains by setting a floor against the euro. The Swiss National Bank yesterday imposed a ceiling on the franc of 1.20 versus the euro, and pledged to defend the target with the utmost determination. "Switzerland has decided that the burden of inflows as a result of the turbulence around them is putting pressure on their currency in a way that is disrupting their real sector. So, they have decided to react," Gokarn said. He went on to add that the move by the Swiss National Bank is not in any way an abandonment of their fundamentally floating exchange-rate system. It is an attempt to deal with temporary factors, Gokarn said. "Our view on exchange rate management is essentially the same. We are looking to not target the exchange rate," he said. But, if there is pressure of any kind that disrupts the real sector the RBI would consider intervention. India has not faced that situation so far, Gokarn said.
IIFL
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