Govt mulls currency swap to stabilise rupee

Written by fe Bureau | New Delhi | Updated: Aug 21 2013, 06:14am hrs
As the rupee tumbled to another historical low on Tuesday, policymakers taking stock of the situation discussed the possibility of currency swap deals with various countries among other things to salvage the situation.

For the record, they, however, said the government would wait for the result of the measures already announced to help the rupee stabilise before announcing further measures.

The rupee slumped to a record low of 64.13 to the dollar in early trade on Tuesday and bond yields hit another five-year high as Asia's third-largest economy bore the brunt of growing money flows out of emerging markets.

Whatever we could have done, we have done, said a senior source in the finance ministry, dismissing any further liquidity tightening steps the government or the Reserve Bank could take in the immediate future. We now hope the rupee will find its sensible level.

The official added that currency swaps were being discussed with a number of nations, but these talks were part of normal business and not specifically targeted as a measure to appreciate the currency.

He did not, however, specify, which nations India was talking to. India currently has a $15 billion currency swap with Japan.

During the day, finance minister P Chidambaram discussed the situation with Planning Commission deputy chairman Montek Singh Ahluwalia, Prime Minister's top economic advisor C Rangarajan, economic affairs secretary Arvind Mayaram and commerce secretary SR Rao. They also discussed the agenda for the G-20 Leaders Summit in Russia in September.

In a reply in Lok Sabha, Chidambaram listed out the steps taken to curb the rupee slide.

A number of steps have been taken to moderate demand of non-essential imports, enhance capital flows and curb speculation in the foreign exchange market to stem the depreciation.