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After biggest market fall in 6 1/2 years, Rajan says all is well
Although the Sensex has plunged 1,624 points and the Indian currency has followed suit, RBI governor Raghuram Rajan gave an assurance on Monday that since the country has strong macroeconomic fundamentals and sufficient forex reserves, it would be able to contain the market volatility.

Rajan while adressing to the fears of investors said, "While I don't want to opine on the future direction of markets, I will say that relative to other countries India is in a good position with strengthening growth, a low current account deficit and narrowing fiscal deficit, moderating inflation, low short term foreign currency liabilities and very size-able exchange reserves relative to imports and liabilities."

"We have come a long way since the difficulties in 2012-13 as a result of actions taken by the government and regulators. Growth is stronger, the current account deficit has narrowed significantly, the fiscal deficit is on a consolidation path, and inflation has halved," Rajan said. "I just want to indicate that we have plenty of reserves which was $355 billion (at the last count), plus $25 billion that exist because some of our forward sales. We have got $380 billion to play with," Rajan said at the Ficci-Indian Banks Association summit. He said: "We will strive to give you the lowest interest rates that is consistent with our effort at bringing inflation under control."

While commenting on th falling Rupee, Rajan said, "What you have seen in the last few days is that the euro and the yen have strengthened considerably even when the dollar has weakened against them. One of the things you must remember when you look at the rupee is that we keep looking at the dollar and say the rupee is weakening against the dollar, but the dollar has also moved across all other currencies." While the rupee has strengthened against the yen and the euro, Rajan said, "We don't look as bad as many other currencies and in fact we have strengthened quite a bit over the last year and a half because of the nearly 20 per cent depreciation of the euro. Similar is the case with the rupee and the yen."

"I think few expected the Chinese move. Now, given that it has become a focal point for markets to adjust, there was a sense that markets have been going up for sometime without correction and when that happens it seems that people get nervous. We have to absorb this volatility but as far as our economic fundamentals go, they are good and they will re-ascertain themselves eventually after certain amount of turmoil," he said.

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