Rupee fall due to external factors, will intervene if needed: D Subbarao, RBI Governer

NEW DELHI: In an attempt to soothe investors and reduce concerns over the rupee fall, RBI governer D Subbarao has said that the RBI may intervene to arrest the volatilty in the rupee, if needed. Subbarao has also reiterated that the fall in rupee is mainly due to the external factors than internal problems.

The RBI had announced a slew of measures to stem the rupee's fall, none of which has succeeded so far. Earlier in the day, the rupee hit a new all-time low of 56.40 versus the dollar.

Subbarao also said that some strutural changes in the current account are needed an has not ruled out selling dollars to oil companies to bring the situation under control. The governer also hoped to curb speculation in the currency markets.

The Reserve Bank on Monday had imposed restrictions of $100 million on "position limit" for forward contracts by banks.

"The position limit for the trading member...bank in the exchanges for trading Currency Futures and Options shall be $100 million or 15 per cent of the outstanding open interest, whichever is lower," RBI said in a notification.

It also advised the banks dealing in foreign currency to bring down their trading limits by June-end.

The RBI notification said that the current Net Overnight Open Position Limit (NOOPL) of the authorised banks will not include the positions undertaken in the currency futures and options (F&O) segment in the forex market.

It further added that the position in the F&O segment cannot be offset by undertaking positions in the over-the- counter market and vice-versa.

RBI had earlier taken host of steps to arrest the fall of value of rupee which has been declining at a rapid pace.

The currency has lost over 22 per cent in the last one year and about 11 per cent since March this year. The pressure increased especially since mid-March, when the foreign funds started withdrawing from the Indian stock market.