Rupee curbs, open market operations to continue: Subir Gokarn, Deputy Governor, RBI

MUMBAI: The RBI said it will not roll back any of its currency-saving measures in the near future as the recent rupee appreciation may turn out to be temporary, and it will continue with open market operations (OMOs) to ease the liquidity pressure. "It is a little too early to start talking about a reversal," said Subir Gokarn, deputy governor at the RBI. "The relief is that there is some degree of stability that has returned to the currency.

But appreciation itself has been the result of some capital flows. But there are still risks out there and we don't want to call a premature reversal of measures," Gokarn toldETin an interview. The rupee has appreciated 7.7% since its lifetime low of 54.30 after the RBI imposed curbs it last used during the 1997 Asian crisis. But the central bank's intervention also sucked out liquidity from the system.

To ease the liquidity pressure, the RBI began buying government bonds in open market operations that raised cash levels in the system. With the 50-basis-point cut in cash reserve ratio, there's speculation that OMOs could be scrapped. But the RBI has no such intention at this point. "OMO remains on the table," said Gokarn.