Reserve Bank of India (RBI) governor Raghuram Rajanruled out on Tuesday any big bang internationalisation of therupee following the inclusion of Chinese yuan into the International Monetary Fund’s (IMF) reserve currency basket.
“The Chinese devalued the yuan initially but then stopped and, in fact, it came up a little since then. Perhaps, with the Chinese inclusion in the SDR (special drawing rights) basket of the IMF, we may see a little more of devaluation,” Rajan told reporters in Mumbai at the customary post-policy review conference with analysts and economists.
When asked about the rupee, which has not been able to leave a similar mark on the world stage as its Chinese counterpart, Rajan sounded a bit defensive saying, “We are on a cautious but steady process of internationalisation and will not go in for big bang measures.” Enumerating the steps taken to open up the market in recent months, which include increasing foreign portfolio investor limits, a review of the ECB guidelines done on Monday and also the Masala Bonds, he said, “All these are in direction to open a little more, but at the same time, it is not a big bang where we lose control over the process; it is a steady process. We are taking steps, we are steadily moving towards being a much more open economy while keeping some of the concerns about stability.”