RBI not to intervene in foreign exchange market, says Deputy Governor Subir Gokarn

MUMBAI: Reserve Bank today said it does not intend to interfere with the exchange rate and its monetary policy stance in the coming months would be determined by movement in inflation.

"In exchange rate policy, Rupee is a floating currency. It remains that exchange rate is market determined and there is no intent to intervene with a particular exchange rate in mind," RBI Deputy Governor Subir Gokarn said here.

Gokaran said the Rupee, which is a partially convertible currency, has depreciated because of global conditions.

"...capital reallocation around the world has impacted many currencies, and we have stayed with our policy," he said.

The Rupee has depreciated against the US dollar by about 9 per cent this year.

The Rupee today weakened by 37 paise to trade at Rs 49.48 against the dollar as the US currency strengthened in the overseas markets.

On the possibility of halting the policy rate hike in its next policy review due on December 16, he said it would depend upon inflation rate.

"We gave the guidance two weeks ago (in mid-year monetary policy)...Unless there is something dramatic that happens to change it, that guidance remains. So let us say, the guidance remains the same until further notice at this stage," Gokarn said.

RBI had since March 2010 raised key rates 13 times with a view to calm down the inflation which was still hovering near the double-digit mark.

The Deputy Governor further said that RBI's projection on inflation has take into account international crude oil prices.

Since the time deregulation of petrol prices, "we assume that the pass through will be more or less full. The new element in this calculation (on inflation projection) is exchange rate movement".

On the rate of price rise, he said the structural drivers of inflation are still strong and the RBI expects it to remain high through October and November.

Headline inflation stood at 9.72 per cent in September. The government is yet to announce the inflation data for October.