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February 8, 2002 | 1950 IST
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RBI favours softer rate, says Jalan

Reserve Bank of India Governor Bimal Jalan said on Friday that the central bank favoured a softer interest rate policy.

"We have a bias towards a soft interest rate policy," Jalan told reporters when asked whether the RBI was looking at a lower interest rate policy.

He said that RBI will intervene to keep the forex market in order whenever there is volatility in the rupee-dollar exchange rate while building up reserves, which is surging towards $50 billion.

"We want two things -- orderliness and to have as much reserve as possible," RBI Governor Bimal Jalan told reporters after meeting Finance Minister Yashwant Sinha in New Delhi.

The rupee ended at 48.70/71 per dollar, down from Thursday's record closing low of 48.6850/7000.

At Friday's close, the rupee has lost over 0.3 per cent against the dollar during the week and nearly one per cent since January. The rupee's record intra-day low is 48.765, hit on Thursday.

Pointing to the reserve position, Jalan said, "India's external situation is very strong." But he declined to comment on rupee slide saying "I do not comment on the rupee fluctuations."

In Mumbai, Jalan said, "we have thin markets and want to have an orderly forex market." RBI was not targeting any particular level for the rupee and that the apex bank was buying dollars in a major way to build up adequate reserves to meet external obligations for the next 12-18 months, he added.

"We should have strong reserves to cover our liquidity at the risk of foreign institutionl investments and short term debt," Jalan said.

Jalan said fundamentals of the economy were strong with low inflation and low interest rate scenario.

(With additional inputs from PTI)

No target level for rupee: Jalan

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