Have enough liquidity to tide over possible US default: RBI
Tags:
The Reserve Bank on Tuesday said the country has sufficient liquidity to manage a possible US sovereign debt default and that the central bank is prepared for any repercussions in the financial markets arising from any such eventuality.
The US is struggling to arrive at a consensus plan to raise a Congress-imposed debt ceiling of $13.2 trillion before August 2, failing which it risks losing its golden rating as well as defaulting on its sovereign debt.
"As far as possible, the US debt default and the impasse over its debt servicing, we have reviewed the position and I believe we have sufficient liquidity to manage the situation.
"We are prepared for any possible repercussions in the markets, but whether they would default or what implications that might have is uncertain at this point of time," Governor D. Subbarao said at the customary post-policy press conference.
When asked if he was in touch with his US counterpart, Subbarao said: "the government has a scheduled bilateral consultation with the US on the debt situation, but the RBI is not a part of the talks. We had a scheduled bilateral consultation with the US at the end of June, but that had nothing to do with the current impasse."
Later during the day, deputy governor Subir Gokarn said the US was venturing in the unknown now. He said even as the resolution of sovereign debt crisis of Europe and the US was in progress, India has ‘enough liquidity to absorb the shocks that could arise from any of these two crisis zones.’
"Our concern is to ensure if there is a significant flight of capital out of the country along the lines we saw in September-October 2008, we have adequate liquidity to cover that and that is an assessment which we have been making and we do believe that we can cover this shock," Gokarn told reporters in a post-policy press meet.
Post new comment