No additional restrictive measures on gold - Chief Economic Adviser
IN a statement yesterday, the Chief Economic Adviser Dr. Raghuram G. Rajan explained:
The exchange rate has depreciated about 5.5% since January 1, 2013 at par with Korea, Turkey and Brazil and much less than South Africa. Clearly a large part of the decline in the value of the rupee in recent days is because of dollar strength.
The decline in the rupee of 7.5% since May 1, 2013 has been significant. However, this is only partly due to the debt outflows after the Fed's remarks. I say partly, because despite the debt outflows, portfolio inflows between May 1 and June 10, 2013 have been significant. On net, India has received USD4.162 billion in equity flows, and lost 486 million in debt outflows, for a net inflow of $3.675 billion.
The other reason for rupee weakening is that typically, the May 2013 Current Account Deficit (CAD) is larger because of seasonal factors. Add on top of that the increased gold purchases as gold prices dropped, and I think we have the main reasons for rupee weakness.
We should see a significant drop in gold imports for June, 2013. I should add that we are not contemplating any additional restrictive measures on gold and there is no reason for speculating on this basis.