In Diplomacy at Home, Govt Set to Repair Ties with RBI Move comes ahead of possible coordinated effort with regulators to stem sliding rupeeSHAJI VIKRAMAN MUMBAI
The government is moving to improve its relations with financial regulators, particularly the central bank, ahead of a possible coordinated effort to stem the rupee’s slide. There is concern that public airing of differences by policymakers is hurting management of the economy at a time the currency is plumbing new depths. One measure being considered is to appoint a senior official in the finance ministry to work closely with the regulators.
The initiative to fix the working relationship between the finance ministry and regulators comes amid a growing feeling at the top levels of the government and RBI that concerted action is needed to stop the slide of the rupee, which closed at 60.24 on Friday and briefly crossed 61 on Wednesday.
In New Delhi on Sunday, Finance Minister P Chidambaram presided over a meeting attended by some of India’s top economic policymakers, including RBI Governor Duvvuri Subbarao, Planning Commission Deputy Chairman Montek Singh Ahluwalia, PM’s Economic Advisor C Rangarajan and the finance ministry’s top bureaucrat Arvind Mayaram, to discuss steps to stabilise the weakening currency. Policy measures in the works could include more intense efforts to woo foreign capital, in particular sovereign wealth funds, which are perceived to be safer than other types of portfolio money, said a person briefed on the issue. The key macroeconomic challenge facing the government and RBI is to manage short-term external debt, amounting to $172 billion, due for repayment next year. India’s total forex reserves are now just under $285 billion. Preparing for Bad Times : The decision to appoint a point person to work with regulators was the outcome of recent meetings between the prime minister and finance minister. Given the prospect of a further slide in the rupee, the government... [continues]
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