RBI checks undue volatility in forex market: FM

Finance Minister P Chidambaram today said that the Reserve Bank of India intervened in the foreign exchange market to reduce undue volatility and check the appreciation of rupee against the US dollar.

A fall in the dollar against major currencies and higher capital flows have pushed up the rupee against the greenback.

"To the extent that RBI, with a view to reduce undue volatility, intervened in the foreign exchange market, such appreciation was moderated," he said in the Lok Sabha during question hour.

While the rupee has strengthened by 6.67% against the dollar during April-October 2007, the rise against other currencies has been lower. The domestic unit rose 1.32% against the euro, 3.83% against the pound and 3.95% against the yen, he said.

The government has announced relief measures to minimise the adverse impact of rupee appreciation on export growth.

These include increasing the number of services eligible for refund or exemption of service tax; enhancement of duty entitlement passbook rates for nine sectors such as textiles and garments, handicrafts, engineering items and processed farm goods by 3%; and enhancement of the rates of duty drawback ranging from 10-40% for many items.

To another query, Chidambaram said the sixth Central Pay Commission is preparing its report and expected to submit it to the government before April 4, 2008. He said the Commission is not examining the issue of the retirement age of government servants as it is not part of its terms of reference. Replying to another question, he said Life Insurance Corporation is awaiting the approval of regulator IRDA to launch a product for people below the poverty line.