109628 rbi headquarters
The Reserve Bank of India will not stay on the sidelines as volatility takes hold of Indian economy. A rate cut is now a live possibility. Image Credit: PTI

New Delhi: The Reserve Bank of India said it’s ready to act to counter financial market volatility amid the coronavirus outbreak, reiterating comments from global central bankers in recent days.

While spillovers into domestic financial markets have been relatively contained, the RBI said in a statement it “stands ready to take appropriate actions to ensure orderly functioning of financial markets, maintain market confidence and preserve financial stability.”

Central banks in Japan and the UK on Monday pledged action to stabilize markets, following on from comments from the US Federal Reserve last week signaling a possible rate cut.

“Growing hopes of coordinated policy action to mitigate a broader fallout to economic activity has boosted market sentiment today,” the RBI said.

India’s benchmark S&P BSE Sensex index was trading 1.5 per cent higher Tuesday, on course for its biggest advance in a month, while the rupee gained as much as 0.4 per cent in early trade before turning lower. Bonds gained early in the session with the yield dropping to 6.34 per cent.

Prime Minister Narendra Modi, who held a review of the nation’s preparedness to handle the spread of the virus, said “there is no need to panic.”