No target or band set for rupee: Gokarn

"Our approach has been that the exchange rate of the rupee should be market determined and the Reserve Bank should be intervening only to manage excessive volatility... without targeting any particular level or band," Gokarn told an RBI-ADB conference on 'Managing capital flows' here.

From a short-term perspective, the decision to intervene in order to avoid destabilisation of both exporting and import-competing producers needs to be viewed in the overall context of domestic conditions.

He further said the RBI policy has been articulated as broadly "non-interventionist", except when confronted with excessively volatile and lumpy or disruptive flows.

He also said the policy on intervention not only aims at quelling the excessive volatility, but also attempts to moderate speculative one-way downward movement of the rupee.

The rupee was the worst performer amongst the 25 leading global currencies last month losing over 4.2 per cent.

Since September 2011, rupee has lost 19 per cent and has been the second worst performer amongst the BRIC currencies year to date after the Brazilian real.

Today, however, the local unit gained 10 paise to end at 55.06 to the dollar against a two-month low it hit last Friday at 55.16. In late June this year, the rupee sunk to its life-time low of 57.15.

Talking about lessons learnt from volatile capital flows, Gokarn said the drivers of the

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