The Reserve Bank today said it has adequate foreign exchange reserves to deal with the declining value of rupee and the widening current account deficit (CAD).
"I believe our forex reserves are adequate to manage current situation," RBI Governor D Subbarao said in a response to whether RBI has enough firepower to defend the rupee, which plunged to an all-time low of 65.56 today.
The country's foreign exchange reserves were up at $278.602 billion as of August 9 compared with $277.17 billion a week earlier.
After breaching the 65 mark, the rupee made some recovery to settle at a fresh closing level of 64.55, still down by 44 paise today against the US currency on persistent dollar demand from banks and importers and sustained capital outflows.
Subbarao also said the recent measures taken to curb volatility of rupee would continue till stability is restored.
"We have taken those measures again in order to curb volatility, in order to curb certain outflows, and we will revisit them as stability returns," he said, clarifying that "RBI does not take any position on the exchange rate, we are not targetting a level of exchange rate." RBI took steps on July 15 and 23 to tighten liquidity.
These measures were taken to "raise cost of rupee resources at the short end which is in the arsenal of instruments available to central bank to defend against volatility in rupee," he said.