Mumbai: With BSE sensex and rupee continuously hitting low, Reserve Bank of India Governor Raghuram Rajan on Monday calmed fears citing strong macroeconomic fundamentals of the country which are much better than many others.
“I wish to reassure the markets that our macroeconomic factors are under control as the economy is in a much better position relative many other economies,” Rajan said.
Rajan said the country has $380 billion in forex reserves to be used as and when the need arises.
The RBI governor also hinted at lower rates, saying the RBI will look at emerging room for more accommodation on the back of lower commodity prices, astute food management by the government and strong anti-inflation policy stance of the central bank.
“Falling commodity prices and astute food management by the government should help RBI (lower rates)”, said Rajan.
He also said he sees oil prices remaining at low levels at for a year or two.
Amid free fall in stock markets, the rupee on Monday crashed to 66.49 against the dollar, plunging a whopping 66 paise. The rupee has not seen such a low level in almost two years in opening trade on sustained capital outflows even as the US currency weakened overseas.
The RBI governor said turmoil in currency market has been long-coming and China is only the last step in it. Rajan, however, said rupee has strengthened against yen and euro, and RBI has resources to deal with rupee volatility.
In its biggest intra-day crash this year, the market benchmark Sensex plunged by 1,006 points while Nifty fell below 8,000 level in early trade on Monday due to heavy selling by funds amid global sell-off as worries about China’s economy deepen.
Here are the highlights of what Rajan said:
– I wish to reassure markets macroeconomic factors under control; Country has USD 380 bn of forex reserves as and when to be used.
– Rajan hints at lower rates as market rout gathers speed; says RBI will look at emerging room for more accommodation.
– Falling commodity prices and astute food management by government should help RBI (lower rates).
– Rajan sees oil prices remaining at low levels at for a year or two.
(With PTI inputs)