On March 16, the RBI conducted the first dollar-swap for $2 billion under which the central bank bought rupee from the market by selling dollars.
Industry body Assocham on Monday welcomed RBI Governor Shaktikanta Das’ assurance that the central bank stands ready to take any measure to help the economy amid the current global health emergency.
Speaking at a hurriedly-called press conference in Mumbai, Das said the Reserve Bank has “enough policy tools and stands ready to take any measures” needed to help the economy tide over the impact of the coronavirus pandemic.
Governor Das’ comments should reassure India Inc about the stability of the Indian financial markets, Assocham Secretary General Deepak Sood said.
“In the midst of pressure on the currencies of the emerging markets and global mismatches in the dollar liquidity, the RBI is rightly and swiftly acting by different tools available to it, including the Swap options.
“Our large resource of foreign exchange of USD 487 billion gives an adequate elbow room to the RBI to be on top of the fast evolving situation in the world markets where there is a risk aversion as nations battle it out with the unprecedented pandemic,” Sood said.
He said both the RBI and the government are doing whatever it takes to mitigate the impact of the coronavirus even as certain segments of the economy, like tourism, trade and transport, have come in under severe pressure.
“As far as the emergency cut in the policy interest rates is concerned, we must have full faith in the RBI Governor’s assertion that nothing is ruled out at this junction. It is clear from his statement that the emergency rate cut is possible.
“We must also have confidence in the Monetary Policy Committee to take an appropriate call, especially in the face of the worldwide reductions in the rates, including taking the same to zero by the US Federal Reserve,” Assocham said.
In two liquidity enhancing measures, Das announced another round of USD 2 billion dollar-rupee swap on March 23, and said the RBI will continue to conduct the long-term repo operations (LTROs) of up to Rs 1 lakh crore as and when required.
On March 16, the RBI conducted the first dollar-swap for USD 2 billion under which the central bank bought rupee from the market by selling dollars.
On the LTROs, it has already conducted four rounds worth Rs 1 lakh crore since February 14, after announcing it at its February 6 policy review.
RBI will announce the first monetary policy for 2020-21 in the first week of April.