Rupee rescue: FinMin-RBI on same page, says Guv Subbarao

The Reserve Bank of India (RBI) is sticking to its guns, and has also tried to talk up the currency markets. It has said that it will continue to respond to external factors in order to cut volatility and manage the exchange rate. CNBC-TV18's Siddharth Zarabi reports.

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Governor Duvvuri Subbarao told reporters on Thursday, that the RBI will continue to take measures to curb volatility in the exchange rate. The statement came on a day when the rupee fell to a record low of 65.56 per dollar.

Designate governor Raghuram Rajan and D Subbarao both attended the briefing, but Rajan didn't offer any comments.

One key factor that Subbarao touched upon was the elasticity coefficient as far as the impact of every 10 percent of depreciation in the rupee on inflation pass through, which is put at one percent. He now says that it has increased; the latest numbers and research by the RBI suggests that that is 1.2 percent now. The implication really is that rupee depreciation has impacted inflation fears significantly.

Subbarao also cleared any doubts of a lack of coordination with the finance ministry. He confirmed that the central bank and the ministry of finance were on the same page regarding measures to stem depreciation in the rupee.