New Delhi, Oct. 26: In what could bring relief to the exporters, the finance minister, Mr Pranab Mukherjee, said on Tuesday that the RBI would intervene to check rupee appreciation if needed.
“RBI is keeping an eye on it (rupee appreciation) and as and when action is called for appropriate intervention will be made by the RBI,” said Mr Mukherjee at the annual Economic Editors Conference.
The rupee has appreciated by about five per cent aga-inst the dollar since January due to record FII inflows.
Mr Mukherjee said that the country had faced a similar situation in the past and “had overcome it without taking recourse to some of the more stringent olicy measures that are by now well known to discerning analysts.”
He said that the government has no intention to cap FIIs inflows that have already reached $24.48 billion this year. “At this time I am not thinking of putting any cap on FII inflows as they will be an insurance towards my current account deficit. Current account deficit is always funded by external funds,” said the finance minister.
In the context of the currency war, the finance minister said that through dialogue the countries would have to find a solution.
Meanwhile, the US has been asking China to allow its currency, the yuan to appreciate by moving in line with market forces as the former wants to boost its exports. However, China has been resisting US pressure. Mr Mukherjee admitted that inflation is a concern, and said he would like the inflation to be 4-5 per cent.