Raghuram Rajan sounds upbeat, says Govt monitoring falling Rupee - Economic Times

NEW DELHI: India is planning a raft of measures such as a sovereign bond or a non-resident bond offering, further easing of rules on foreign direct and portfolio investment to boost inflows, and to finance its widening current account deficit besides supporting a weak local currency. Stepping in to calm nerves after the rupee plunged to a life-time low against the dollar, the Chief Economic Advisor Raghuram Rajan said the government, RBI and securities market regulator Sebi are monitoring the developments and will take action as "warranted". The partially convertible rupee ended at 58.39/40 per dollar, after topping 58.98 to the dollar during the day. "We will be looking at all options for safe financing of the current account deficit... The attempt is to ensure that CAD is safely financed," Rajan said, when asked if the government is considering floating overseas sovereign or non-resident Indian bonds along the lines of the Resurgent India Bonds and Millenium Deposit Schemes which were launched in 1999 and 2000 respectively by the previous NDA-led government. Asked about the potential size of such an offering, he said: "It's still early days yet and there's no sense of panic in the government to take new measures. The measures, which we are announcing, have been contemplated over time and the rollout is happening... We have been examining all the issues for months and will undertake them as and when they come in the front burner." However, Rajan declined to identify the sectors. Policymakers in the government have earlier named defence production as one of the sectors that could be up for further liberalisation apart from a complete revamp of the definition of the FDI and foreign institutional investment to emulate the international framework. The finance ministry has proposed to treat all portfolio investment above 10% as FDI. He also added that steps to boost portfolio inflows would also be part of this package. "We will continue to implement measures to ensure that portfolio investor inflows are enabled and encouraged and some of these measures will be announced shortly," he told reporters. Rajan said the rupee's depreciation is in line with other emerging market currencies. The exchange rate has depreciated about 5.5% since January 1, 2013, at par with Korea, Turkey and Brazil and much less than South Africa. "Emerging market currencies across the world have depreciated as debt outflows have increased following the Fed's suggestion that its asset purchases may be tapered down in September. My understanding is that any tapering will be measured, but markets have reacted." Rajan attributed the sharper 7.5% decline in the rupee since May 1, 2013, to the debt outflows after the Fed's comments. Copyright © 2013 Times Internet Limited. All rights reserved. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGmvqMrJz2z3UAEgnwYxh3vxoTqjg&url=http://economictimes.indiatimes.com/news/economy/policy/raghuram-rajan-sounds-upbeat-says-govt-monitoring-falling-rupee/articleshow/20547893.cms

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