Mumbai: As the rupee dipped to its all time-low of 54.46 to a dollar in early trade on Wednesday, leading to increasing calls for arresting its fall at any cost, RBI Deputy Governor K C Chakrabarty said the Reserve Bank intervenes in the forex market only to curb volatility and not the slide.
"We don't intervene to arrest the rupee fall, we intervene only to arrest the volatility, you must understand the difference," Chakrabarty told reporters on the sidelines of an event here.
The rupee has been depreciating for over a fortnight due to higher demand from importers and concerns over the widening current account deficit, and dipped to an all time low of Rs 54.46 to the dollar during trading earlier on Wednesday. Yesterday, it was at an all-time closing low of 53.97 to the dollar despite reported massive dollar selling by the monetary authority.
In fact, the rupee has been on the downslide since last August when dollar became the most-sought after currency. Since then, it (rupee) lost nearly 24 percent.
Last December 15, it had hit the life-time low of 54.30 in intraday trade. However, since January, the local unit has regained some lost ground, appreciating nearly 10 percent.
But come April, it resumed its downward spiral on the back of a record high current account deficit of 4.3 percent during the last quarter ending December and a high fiscal deficit, which touched 5.9 percent against a projected 4.1 percent in FY12.
The steep plunge has forced the Reserve Bank to take a host of steps to stem the fall, including intervening in the market by selling the dollars from its USD 294-billion reserves.


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