FXMarketAlerts Team
FXMarketAlerts
Published at 06:27 (GMT) 24 Aug
ET: RBI will not have any "hesitation" in using foreign exchange reserves to reduce currency volatility, governor Raghuram Rajan said on Monday, while also noting India was in a better position relative to other countries. RBI Governor Rajan called on central banks to avoid giving "booster shots" to stock markets. "It is not the role of the central bank to elevate sentiments unduly, to deliver booster shots to the stock market so that it can soar for a while, only to collapse when reality hits," Rajan told a conference. "We do not have to look far beyond our borders to see the consequences of such boosterism." Rajan has resisted pressure in recent weeks from India's Finance Ministry to add to three interest-rate cuts this year. He said the central bank uses a number of models to forecast inflation and doesn't rely on a "seat-of-the-pants approach" to setting monetary policy. "I want rate cuts to not be seen as goodies that the RBI gives out stingily after much public pleading," Rajan said. "Rate cuts are a natural consequence that I can assure you the RBI will have no hesitancy in delivering once we can be assured of low inflation."
On FX, USD/INR 1M NDFs saw slight gains towards 67.0000 towards the noon from <66.7000 in early Asian trading hours. Spot gapped up to open above the key 66.0000 level at 66.4700 vs. last close of 65.8250. Pair printed a fresh 2-year high of 66.5200 at last check with more upside likely in the day. Focus now on the 67.0000 handle. Meanwhile, SENSEX slipped below 26,500 amid a global rout to a 10-month low, and was last seen down by about 3.5%. 10Y yields trading near 7.825% at last sight. CC
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