No plan to intervene in forex market now: Gokarn
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The Reserve Bank of India (RBI) on Wednesday ruled out any immediate intervention in the foreign exchange market, saying it will do so only if there is real pressure on the system.
"The Reserve Bank will consider intervention in the foreign exchange market if pressure on the exchange rate is too high," Deputy Governor Subir Gokarn told reporters here on the sidelines of a Ficci meet on capital markets.
He was responding to a query whether following a massive eight percent fall in the Swiss franc yesterday and resultant volatility in the domestic money market, the regulator was looking at any intervention.
"Our view on the exchange rate management is essentially the same. We are looking to not target the exchange rate. If there is pressure of any kind that disrupts the real sector we would consider intervention. But we have not faced that situation so far, so our stance remains," Gokarn said.
The Swiss Central Bank had yesterday imposed a ceiling on the franc of 1.20 versus the euro, the first such move in more than three decades, and pledged to defend the target with utmost determination.
"Switzerland has decided that the burden of inflows as a result of the turbulence around them is putting pressure on their currency in a way that is disrupting their real sector. So they have decided to react.
"The underlining view is that this is a transitory phase and this is not in any way an abandonment of their fundamentally floating exchange-rate system. It is an attempt to deal with temporary factors," Gokarn said in reaction to the Swiss central bank's move.
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