RBI to act if rupee volatility persists
03 Dec 2011
The Reserve Bank of India will move swiftly to stem any sharp movement in the exchange rates and to avert the risk of an escalation in the spiral in the rupee's fall, governor D Subbarao said today.
Delivering the keynote address at the plenary session of the Confederation of Indian Industry's CFO Summit 2011 in Mumbai, he said the RBI also stands ready to address any sign of stress in domestic liquidity.
He said the RBI has drawn a clear distinction between monetary policy, which is targeted at fighting inflation and liquidity management.
''Here again, we have the instruments and the willingness to use them, in the context of our distinction between liquidity management and monetary policy,'' he said.
He, however, said while there are many challenges to managing the growth-inflation dynamics, both external and domestic, they are manageable.
Yet, he said the current moderation in economic growth will help ease inflationary pressures, which in turn will help stabilise growth as well.
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