RBI Will Not Hesitate to Use Reserves to Reduce Rupee Volatility: Raghuram Rajan

Speaking at a banking conference in Mumbai on Monday, Reserve Bank of India Governor Raghuram Rajan said the central bank will not hesitate to intervene to reduce the volatility of rupee which breached 66.50 levels. Here are the highlights of his speech.

• We have 355 billion dollars, plus another 25 billion in forward purchase that are not required until next year to meet foreign currency FCNR liabilities.
• RBI will not hesitate to use reserves to reduce rupee volatility.
• Central bank needs to guard against inflationary threats.
• Credibility of central banks comes from ability to manage inflation.
• 7 years after financial crisis, advanced economies are growing slowly.
• Emerging markets are facing difficulty with their old export led growth modal.
• Many of you are watching markets this morning, worried about the continued volatility from last week.
• While I don't want to opine on future direction of markets, but relative to other countries India is in a good condition.
• Strengthening growth, low current account deficit, narrowing fiscal deficit, moderating inflation, low short term foreign currency liabilities.
• Low inflation will give investors trust in markets.
• RBI will look at emerging room for more accommodation.
• Will not abandon 4% inflation target.
• Falling commodity prices and astute food management by government should help RBI (lower rates).
• Oil prices to remain at low levels for a year or two.
• Low inflation will give investors trust in markets.
• Need to clean up bank balance sheets.
• Economic growth below potential levels.
• Though consumer inflation has fallen sharply, inflation expectations among the public is still high.
• We have marco-economic problems under control; this will reassure markets
• Need to increase domestic demand.
• Structural reforms to help growth.