Indian rupee hitting 45-50 to US dollar may impinge on exports: Raghuram Rajan

Apr 02 2014, 18:56 IST
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What we are exporting today is what was contracted three-four months ago: Raghuram Rajan What we are exporting today is what was contracted three-four months ago: Raghuram Rajan
SummaryWhat we are exporting today is what was contracted three-four months ago: Raghuram Rajan

While the current slowdown in exports has nothing do with appreciation of rupee, strengthening of the domestic currency to 45 or 50 levels against the US dollar might "impinge" on the country's outward shipments, RBI Governor Raghuram Rajan today said.

"A certain amount of leeway (in rupee movement) this way that way is fine. We are not overly worried about that... Nevertheless a substantial strengthening of the currency to USD 45 and USD 50 levels might impinge on exports especially because some of our competitor emerging markets have depreciated currencies," he told CNBC TV18.

Read: Governor Raghuram Rajan's RBI monetary policy review statement

The Governor, who announced the first bi-monthly monetary policy yesterday, said sluggishness in exports in recent months is more to do with a slowdown in industrial economies in the first quarter of this year.

Read: Raghuram Rajan leaves repo rate unchanged in RBI monetary policy review

"What we are exporting today is what was contracted three-four months ago. Today's exchange rate has nothing to do with those levels of export," Rajan added.

Exports contracted 3.67 per cent in February to USD 25.68 billion.

The rupee strengthened by 14 paise to touch a fresh eight-month high of 59.77 against the US dollar in early trade at the Interbank Foreign Exchange market.

Rajan further said: "We do not want to reach the level where we think you will have renewed volatility (in exchange rate) because it is too strong. We will take precautionary measures to reduce volatility at that point, but you have to be somewhat agnostic over a range".

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