Rajan Says India Has Enough Reserves To Intervene To Check Rupee Volatility

(RTTNews) - India has sufficient foreign exchange reserves to intervene in the market to curb any possible volatility in the rupee, the Reserve Bank of India Governor Raghuram Rajan said Monday.

The country has about $355 billion in reserves and another $25 billion in forward contracts, so forex reserves totaling $380 billion available to use when needed, the central bank chief said at a banking conference in Mumbai.

The RBI will not hesitate to make use of the reserves when needed, Rajan said. "We try and prevent undue volatility...if we see undue volatility, we have the resources to deal with that," he said.

The Indian rupee fell sharply on Monday to a two-year low on the backdrop of steep declines in the global markets over fears of a severe Chinese slowdown. The Indian stock market also plunged with the benchmark Sensex tumbling more than 1,000 points during the day. The peer index Nifty slumped nearly 500 points.

Rajan also noted that India has come a long way since the 2012-13 crisis and is now in a better position than its peers in terms of economic fundamentals, to withstand any volatility in financial markets.

That said, Rajan pointed out that India's economic growth is still below potential, inflation remains high and stressed assets in the financial system continue to be high, limiting growth and new lending.