India today said it has “adequate” foreign exchange reserves — at present $280 billion — to defend its currency amid global volatility and ruled out taking any external assistance unless there is a “radical” change in the situation.
Planning Commission Deputy Chairperson, Montek Singh Ahluwalia also said the rupee’s fall this year has clearly overshot limits.
“With $280 billion in reserves, I don’t think we will be drawing on currency swap arrangements unless there is a radical change in the situation,” said Ahluwalia, who is the ’sherpa’ to Prime Minister Manmohan Singh at the ongoing summit of the Group of 20 industrialised and emerging economies.
Ahluwalia also reiterated that some depreciation of the Indian rupee — which had touched historic low of close to Rs 69 last month — was justifiable.
“But when it was close to Rs 69 there was clear overshooting and the extent of rupee was not all connected with high market volatility,” he said, adding that economists, working on varying assumptions, had estimated the rupee’s value at anything between 59 and 65 against the US dollar.
“Some depreciation was justifiable. But when it was 69 there was clear overshooting that was not desirable,” he said.
He said currency markets had “over reacted” against the backdrop of a global volatility in the currencies of emerging economies in the wake of the imminent phasing out of fiscal stimulus by the US.
The Federal Reserve mulled an early pullout of the $85 billion a month.