The Hindu : 'RBI comfortable on rupee appreciation'

Online edition of India's National Newspaper
Thursday, May 22, 2003

Business

Business

'RBI comfortable on rupee appreciation'

BANGALORE MAY 21. The Reserve Bank of India today said it was ``rather comfortable'' on the appreciation of the rupee against the U.S. dollar.

``We are rather comfortable...We feel that the movement of exchange rate is adequate looking at what is happening in the international market and the kind of currency alignments taking place internationally,'' RBI Deputy Governor, Rakesh Mohan, told reporters here.

The rupee closed yesterday at a two-year high of Rs. 46.90 against the dollar with the forward premiums crashing to an all-time low of 0.35 per cent for six months and 0.38 per cent for the one-year forward.

``The kind of currency alignments taking place internationally and today, we feel that the Indian market and the currency market is responding quite adequately to the things taking place,'' Mr. Mohan said. He said the RBI was interested in maintaining orderly conditions and stability in the market. Asked whether RBI was mopping up dollars to increase its value, he said ``we will continue to act so that there is no instability''. He said the RBI had not set any target for the exchange rate and maintained that its role would be to ensure stability in the market.

Mr. Mohan said Indian companies had responded adequately to changing foreign market conditions. Asked about the decline in profits of software companies due to the impact of rupee appreciation, he said software exports grew by 18 per cent last year and there was no cause for concern. ``We don't have any cause for concern,'' he said.

PTI

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