Chennai, July 4 (IANS) The Reserve Bank of India’s liquidity management activity is not related to exchange rate movements and neither is the rupee movement directly related to open market operations, said a senior official Wednesday.
Speaking to reporters here Wednesday, the central bank’s Deputy Governor Subir Gokarn said: “I don’t think the rupee movement is directly related with open market operations. Liquidity management operations are unrelated to exchange rate movements.”
Gokarn was here to address a seminar, ‘Vision Tamil Nadu Building Sustainable Tomorrow’ organised by industry lobby Assocham (Associated Chambers of Commerce and Industry of India).
He said open market operations were driven by judgements on liquidity conditions.
Gokarn said the high current account deficit also weighed on the rupee and an improvement in the current account could help the currency to stabilise.
He said the rupee will stabilise after the current account deficit was corrected, which may be due to lower oil prices or falling exports and imports.
On the monsoon delay, Gokarn said the bank was watching the monsoon’s progress like everybody else.
