RBI to reverse cash steps only after rupee stability restored

Subbarao says undue volatility of the exchange rate is harmful for growth and stability

The Reserve Bank of India Governor Duvvuri Subbarao said on Friday the central bank would roll back recent cash tightening measures only after it determines stability has been restored in the foreign exchange market.

"In the Reserve Bank's view, undue volatility of the exchange rate is harmful for growth and stability, and such volatility should be curbed," Subbarao said in a speech in the southern city of Hyderabad.

Last month, the RBI raised short-term rates and also placed restrictions on banks to borrow from the central bank to make funds costlier for stemming the rupee's decline.

The Indian rupee which touched its lifetime low of 61.21 to the dollar on July 8, has been the worst performer in emerging Asia so far this year.