UK result a shock but RBI prepared: Raghram Rajan

5 Dariya News

Basel (Switzerland) 24-Jun-2016

Markets around the world are trying to factor the consequences of the UK's decision to quit the European Union, RBI Governor Raghram Rajan said on Friday.He said in a statement that the Reserve Bank of India was ready to act when necessary."Markets are trying to factor the consequences of this development and this has already led to sharp corrections in financial markets around the world," Rajan said.He said the RBI was continuously maintaining a close vigil on the market developments, both domestically and internationally."(We) will take all necessary steps, including liquidity support (both dollar and rupee), to ensure orderly conditions in financial markets," he said.The Governor said the RBI had prepared for this outcome too although polls before Thursday had suggested confidence in the 'Remain' vote on Brexit."The Indian economy has good fundamentals, low short term external debt, and sizeable foreign reserves. These should stand the country in good stead in the days to come," he said.Rajan earlier told CNBC TV18: "RBI is watching the markets. It is ready to act where there is disorderly conduct of the markets. We are prepared to act."In any kind of market volatility, there is opportunity also. Some movement in currency is warranted. We are watching all the markets and prices though it is not an immediate shock for liquidity in the system."

Britain's vote rattled Indian financial markets, shaving some over 1,000 points, or 4 per cent, off a key equities index, while pulling the rupee at around Rs 68 to a dollar mark. The Indian Finance Ministry sought to calm stakeholders' nerves amid mayhem in the financial markets. "The government and the RBI as well as other regulators are well prepared and working closely together to deal with any short term volatility," Finance Minister Arun Jaitley said in a statement from Beijing. "Our aim will be to smooth this volatility, minimize its impact on economy in short term. For the medium term, we will pursue our reforms agenda."Around 1.22 p.m., the sensitive index (Sensex) of the BSE was ruling at 26216.25 points, down 785.97 points, or 2.91 per cent, while the Nifty of the National Stock Exchange was trading at 8,022.20 points, down 248.25 points, or 3 per cent.