New Delhi:There is no need to intervene in the forex markets or cap foreign portfolio inflows, which have pushed the Indian rupee to more than five-and-half-month highs, the finance minister said on Monday.
“The Reserve Bank is monitoring it and I don’t think just now there is any cause for intervention,” Pranab Mukherjee told ET Now television. “As and when intervention is called for, the Reserve Bank will be there.”
The partially convertible rupee was trading at Rs44.52 per dollar at 2:18pm, up 5.6% since the end of August on surging foreign portfolio investment in the fast-expanding economy.
Foreign funds have pumped $19.2 billion into Indian equities so far in 2010, compared with $17.5 billion in 2009, powering the benchmark 30-share BSE index to 33-month highs.
Many emerging economies have voiced concerns over volatile fund flows, with foreign investors shifting focus to higher-yielding markets.
Asked if the time was not yet right to cap foreign inflows, Mukherjee said: “I think so.”
India requires sustained foreign investment to plug its widening current account deficit, which has been worsened by a yawning trade deficit.
Meanwhile, several governments around the world are moving to keep their currencies from appreciating to boost exports and improve trade balances.
In Asia, Japan intervened for the first time in six years on 15 September to prevent the yen from worsening a faltering recovery. Colombia and Thailand have made similar moves.