The Reserve Bank of India and the Government are likely to come out with measures to stabilise the rupee by the end of the week, according to Arvind Mayaram, Secretary, Department of Economic Affairs.
Today, continuing with measures to shore up the rupee, the RBI said it will sell Rs 22,000 crore of short-term cash management bills every Monday, beginning next week, to drain liquidity from the banking system.
The measures that are likely to be unveiled over the weekend include easing norms for companies to tap overseas borrowings and raising import duties on non-essential goods.
“I think you should wait till the end of the week. The Finance Minister will be talking about this later,” Mayaram told newspersons after RBI’s Central Board meeting.
Chaired by outgoing Governor D. Subbarao, the Board meeting was attended by, among others, Financial Services Secretary, Rajiv Takru; the RBI Governor-designate, Raghuram Rajan, as a special invitee; four Deputy Governors, and 12 other directors.
The Central Board, at its meeting in Mumbai, reviewed the current economic situation, global and domestic challenges and policy responses, as also the Draft Annual Report (2012-13) on the working of the RBI.
On the Government’s plans for a sovereign bond issue for non-resident Indians, Mayaram said, “The Government hasn’t said that we are going to be launching a sovereign bond, so why is this question coming again and again?”
The market is rife with speculation that the Government will either sell sovereign bonds or issue non-resident bonds to save the battered rupee and fund the CAD.
Finance Minister P. Chidambaram had earlier said the option of sovereign bond issue was on the table, but that the Government will not rush into a decision.
However, RBI Governor Subbarao has expressed reservations over the issue of sovereign bonds. Meanwhile, on the issue of NRI bonds, State Bank of India Chairman Pratip Chaudhuri reiterated his position that such financial products are difficult to distribute in retail and also to a particular group.
Optimistic Rajan
Raghuram Rajan, who will take over as RBI chief on September 5, expressed optimism that though the economic environment is challenging, the country will overcome it.
For the next three weeks, Rajan is on special duty at the central bank in the run up to his taking over.