The Hindu : `No specific target for rupee-dollar rate'

Online edition of India's National Newspaper
Friday, Mar 26, 2004

Business

Business

`No specific target for rupee-dollar rate'

By Our Special Correspondent

MUMBAI, MARCH 25. The Governor of the Reserve Bank of India, Y. V. Reddy, today said the exchange rate was market determined and there was no specific target set for the rupee vis-a-vis the U.S. dollar.

The rupee continued gaining for the sixth straight session today to hit a new 44-month closing high of 44.7400/44.7450 a dollar.

"There is no target for the exchange rate, it is market determined,'' Dr. Reddy said on the sidelines of a conference on `Money and Finance in the Indian Economy' at the Indira Gandhi Institute of Development Research here.

Despite strong foreign funds flows recently for investment in Government's disinvestment process, the RBI's policy that the exchange rate was based on market forces, led to a smart rally in the exchange rate of the rupee.

Close watch on inflation

PTI reports:

Dr. Reddy said the central bank was keeping a `close watch' on inflation, which was expected to be well below 5-5.5 per cent at the end of the current fiscal. "The international commodity prices have seen a hardening of almost 20 per cent, but domestic conditions are favourable and we have cushions to handle the pressure,'' Dr. Reddy.

The RBI had projected inflation to be around 5-5.5 per cent at the beginning of the year and in the mid-term review scaled it down to 4-4.5 per cent with a downward bias. Subsequently, the central bank also removed the bias, he said.

The inflation, after 16 weeks, fell below 5 per cent to end at 4.91 per cent on March 6.

On finalising the date for the monetary and credit policy for fiscal 2004-05, he said the RBI was internally studying all issues and expecting to announce it in a week's time.

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