S. S. Tarapore, former deputy governor, RBI at a round table discussion on capital account convertibility organised by the Indian Merchants' Chamber:
The Reserve Bank of India (RBI) should not allow any further significant appreciation of the real effective exchange rate of the rupee and it would be disastrous if there were any significant nominal appreciation of the rupee vis a vis the US dollar.
It will be desireable to have a transparent exchange rate policy which would generate confidence. At the same time if the extent of intervention is declared contemporaneously with the weekly reserve figures, the need for intervention will be minimised.
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August 1, 1997
C Rangarajan, governor, RBI, speaking at the awards ceremony organised by the Engineering Export Promotion Council (EEPC):
"There can be no rigid formula governing exchange rate determination. ....With capital inflows the natural tendency is for the domestic currency to appreciate. Such an appreciation can be prevented only if the central bank intervenes ... If the nominal exchange rate is stabilised at a certain level by letting the forex assets of the central bank to increase, it may have an adverse effect on the exporters through price increase arising from more than the desired increase in money supply. Exporters need to understand that containment of domestic price increase has the same effect as a depriciation of the nominal exchange rate.
August 15, 1997
Y V Reddy, deputy governor, RBI, addressing the Forex Association of Indias national assembly at Goa:
The findings of an analysis of the real effective exchange rate (REER) shows that the rupee appears to be overvalued. As per the REER, it would certainly appear so, irrespective of the base chosen.
August 19, 1997
The Prime Minister, Inder Kumar Gujral, in an interview to the Economic Times:
The government would shortly fix a band to signal the exchange rate of the rupee in relation to the US dollar.The finance ministry and the Reserve Bank of India are currently working on the exchange rate band within which the rupee would be allowed to move freely.