Kamath sees no change in interest rates

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New Delhi, May 8 : Despite the Reserve Bank of India hiking the credit reserve ratio to 8.25% in its annual monetary policy, ICICI Bank managing director and CEO KV Kamath on Thursday ruled out any change in the interest rates. “At this point of time I think no change in interest rate is seen,” he said.

“The market has not at present judged which way interest rates are going,” he said adding that however if the yield on 10-year government bonds in taken as an indicator, there has in fact been a drop in interest rates.

However, bankers and market players will need some more signals to determine the true level of interest rates and at present, there are no definite indications to say that interest rates would change, Kamath said.

In April, the RBI hiked CRR by 0.75% in two separate announcements as anti - inflationary measures aimed at sucking out about Rs 27,000 crore excess liquidity in the banking system. However, Kamath maintained that liquidity is still quite good in the market and so the market would determine interest rates.

On the issue of the weakening rupee against the dollar, Kamath said it was mainly because of expectations of stable interest rates in the United States. “The US dollar is turning stronger because of this and so the rupee will be affected similarly,” he pointed out.

He added that at present it is difficult to forecast where the rupee is going but in the long run he said it is likely to strengthen further although global events will have to be taken into consideration. Continuing its slide from previous days, the Indian currency hovered near a one-year low of 41.69 against the US Dollar on Thursday.

Kamath also said the effects of the rising prices of crude oil globally on Indians is diminishing.