Raghuram Rajan says RBI will not hesitate to use forex reserves to curb rupee volatility

The Reserve Bank of India (RBI) will not have any "hesitation" in using foreign exchange reserves to reduce currency volatility, Governor Raghuram Rajan said on Monday as turmoil in global markets sent the BSE Sensex and Nifty down more than 4 per cent and the rupee to its lowest since late 2013.

The RBI Governor said India was in a better position relative to other countries to withstand the current global markets volatility sparked by steep falls in Chinese equities.

The rupee slumped to as low as 66.49 per dollar on Monday, its lowest since September 2013, as Asian markets reeled under fears of a China-led global economic slowdown.

Rajan added India's macro-economic problems were "under control" although he added the country would need to focus on increasing domestic production as an effective way to protect itself against a global economic slowdown.

He also said the central bank's priority remained to help economic growth by bringing down inflation along a "glide path" that aims to keep consumer prices growing an annualised rate of between 2 and 6 per cent.

India's annual consumer price inflation slowed down to 3.78 per cent in July, its lowest level on record.

(Reuters)