Finance Minister Pranab Mukherjee has said that intervention in the currency market would be considered at an appropriate stage and he has discussed with Reserve Bank Governor D Subbarao the situation created by the depreciating rupee in the past few days. I had a discussion with the RBI Governor as he is here, Mukherjee told a group of Indian reporters here. The Finance Minister and RBI Governor are here to attend the annual meetings of the Indian Monetary Fund and the World Bank. Mukherjee said the government was closely monitoring the situation and intervention in the currency market would be considered whenever necessary. We will watch the situation for some time and as and when intervention would be required that will be considered at that stage, Mukherjee said in response to a question. In order to check high volatility in local currency value,Central banks world over intervene in markets through buying or selling of foreign currencies,as required. This week alone,the rupee lost 231 paise,or 4.89 per cent,against the US dollar. Meanwhile,asserting that he has no worries as of now on capital flows,Finance Minister Pranab Mukherjee has said the Government would have to take steps if they go beyond a point. Up till now I am not very much worried over it because our current account deficit can absorb the type of flows which is taking place, Mukherjee said. But if it goes beyond a point and if we find that we do not have that absorption capacity then we should have to take the step. But that stage has not yet come, he added. Finance Minister was responding to a question about the recent trend in capital flows in the world. Fortunately,compared to last year the FDI flow has increased substantially. I think it is 133 per cent step up in the last four,five months, the Finance Minister said. Amid fears of a second dip recession,Mukherjee said,We are in a situation when international economic situation is very difficult. There is a lurking doubt whether a second dip recession is going to take place and what role international financial institutions and all the organisations (will play) to overcome the crisis, Mukherjee said. There has been no ready made suggestion or formula but everybody (has) underlined the need of taking concrete steps, he added.
