New Delhi: India's central bank reiterated it would intervene in the currency market if there is a risk to the economy and that it doesn't have a ‘target' for the rupee.
"Our view on exchange rate management is essentially the same, that we are looking to not target the exchange rate but if there is pressure of any kind that disrupts real sector, or potentially the real sector, we would consider intervention," Reserve Bank of India Deputy Governor Subir Gokarn said at an event in Mumbai yesterday.
"We have not faced that situation so far, so our stance remains."
The Swiss National Bank Tuesday said it would cap the franc's rate to protect trade hurt by the currency that last month reached a record high against the euro and the dollar.
Vulnerable
The move may leave Norway and Sweden vulnerable to unwanted gains in their currencies as countries such as Brazil and Japan fight to limit appreciation amid a flight from the euro debt crisis and near-zero interest rates in the US.
India's rupee, which has strengthened 1.7 per cent in the past year, advanced 0.2 per cent to 46.04 per dollar in Mumbai.
"Switzerland has decided that the burden of inflows as a result of the turbulence around them is putting pressure on their currency in a way which is actually disrupting their real sector," Gokarn said. "So they have decided to react to it."
He said: "The underlining view is that this is a transitory phase and this is not in any way an abandonment of their fundamentally floating exchange rate system." It is, ‘an attempt to deal with temporary factors,' he said.
The Swiss central bank said it is ‘prepared to buy foreign currency in unlimited quantities,' to keep the euro above 1.20 francs.
