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“RBI has very little involvement in Forex market” said the deputy governor of Reserve Bank of India, Rakesh Mohan.  He also confirmed that the Reserve bank had only a small amount of involvement in the Forex market, which resulted the Rupee to secure at a nine-year high of 40.79 per dollar 2 days back. 

As confirmed by report, he also said that the revenue in the Forex market heaved to 6.5 trillion USD in the trading years 2006-07 as compared to the 1.3 trillion USD in the trading years 1997-98.  

He was also of the opinion that though the Reserve Bank of India intervenes in the Forex market in a key way, if the volume of involvement is taken into consideration, it is really small in comparison to the proceeds in the Forex market on the whole.
As of now, the trading market feels that the central bank wants to let the Rupee rise against the Dollar in order to check a strengthening price rise. On the other hand, a lower price rise figure exposed newly generated fears that the Reserve Bank of India could now step in the Foreign exchange market to shield home exports.
 

Mr. Rakesh Mohan also disclosed that the growth of asset flows during the last six months have made it even more complicated for the Reserve Bank of India to control the state of affairs in the currency market.

He also stated that over a long stretch of period, with the fiscal sector developments, the nation’s currency market has expanded and a great deal of price breakthrough is happening.

He also said that despite the fact that inflows increase the liquid cash flow into the system, there were stretches of tension accompanied by the improved tax collections, which have amplified the challenge of liquidity supervision for the central bank.  
 

 

 

This entry was posted on Friday, May 18th, 2007 at 7:54 am and is filed under Forex News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.