India central bank governor says not targeting value of rupee

[MUMBAI] India's central bank will not target the value of the rupee, Governor Raghuram Rajan said on Wednesday, adding it would only intervene at times of volatility as per its stated policy.

The comments come after the Reserve Bank of India on Wednesday said "an excessively strong rupee is undesirable" as part of a statement in which it cut interest rates by 25 basis points to 7.50 per cent.

"I said an excessively strong rupee is undesirable, which you'll agree I'm sure with. That's a statement that is very hard for anybody to disagree with. The fact that it is undesirable doesn't mean that we'll necessarily act against it if that situation were to arise," Mr Rajan told analysts at a conference call.

"I believe that what we can do is perhaps act against temporary undesirable volatility. It's very hard for us to act on a sustained basis to maintain a value of the rupee."

Turning to the monetary policy, Rajan said real interest rates of 1.5 to 2.0 per cent were appropriate at this point in the economic cycle.

REUTERS