RBI intervention when necessary, says Pranab

New Delhi: With rupee falling to record low against dollar, Finance Minister Pranab Mukherjee today said the government is taking steps to arrest volatility in the foreign exchange market and the Reserve Bank of India (RBI) will intervene when necessary. "The government is taking a series of steps. However, managing rupee is market-related…. There is a lot of volatility," he told reporters here.

The Indian rupee slid to a fresh low of Rs 55.32 against the US dollar in the afternoon trade today as foreign funds pulled out from emerging markets avoiding risky assets. "As and when RBI will consider necessary they will intervene. It depends on the market forces and market forces are uncertain," Mukherjee said.

The rupee has been one of the worst performing currencies in Asia and has been consistently hitting lows in the last fortnight, in spite of RBI interventions by selling dollars in the forex market. The rupee has lost over 22 per cent since the beginning of the year.

Global risk aversion is putting pressure on the domestic currency as foreign funds are pulling out money. Besides, a widening current account deficit and concerns of investment in India is also putting pressure on the rupee. To check the sliding rupee, RBI has taken a slew of policy steps to increase dollar flows, including relaxing interest rates caps on non-resident deposits and asking exporters to convert half of their foreign currency earnings into rupee.