Even as the rupee fell to an all-time low of 52.73 vis-à-vis U.S. dollar on Tuesday, the government said RBI will take the required action while conceding the central bank’s intervention may not be of much help. “RBI intervention (in the forex market) will not help,” Finance Minister Pranab Mukherjee told reporters while attributing the decline to pull-out of funds by the Foreign Institutional Investors (FIIs) and uncertain global economic situation. He further said the Reserve Bank of India (RBI) is monitoring the situation “closely and will take the required action in light of the international developments as situation unfolds”. RBI, which described the fall as “disruptive”, said it is yet to decide on intervening in the foreign exchange market. Mr. Mukherjee said, “The increased uncertainty in the euro-zone on account of sovereign debt crisis has led to shifting of capital from Europe to USA which has hardened the US dollar against most currencies.” The rupee is the fourth-most depreciated currency in the world and the most depreciated in the Asian continent. Commenting on fall in rupee, Reserve Bank Governor D. Subbarao said in Hyderabad: “Our policy is that if the macro-economic situation is impacted due to the exchange rate fluctuation or undue volatility, we will have to intervene. We are yet to decide whether to intervene or not at the moment.” RBI, he further said, “will intervene when it is consistent with the policy. But in real terms I cannot tell (when the Reserve Bank of India will intervene).” The intervention in the forex market, he added, would be in accordance with the RBI’s policy. Meanwhile, the rupee after hitting a historic low of 52.73 to a dollar, recovered some lost ground to settle at 52.29/30.
HBL
