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Post Brexit, Governor Rajan says RBI prepared for any contingency

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New Delhi : After a sharp decline in the rupee with the EU referendum indicating ‘leave’ votes slightly more than the ‘remain’, Reserve Bank of India (RBI) Governor Raghuram Rajan on Friday said that he was not overly worried over Brexit, as the markets are trying to factor the consequences of this development and the central bank is ready to provide liquidity wherever necessary.

“Markets are trying to factor the consequences of this development and this has already led to sharp corrections in financial markets around the world,” Rajan said.

Assuring that the central bank is continuously maintaining a close vigil on the market developments, Rajan further said, “The Reserve Bank will take all necessary steps, including liquidity support (both dollar and INR), to ensure orderly conditions in financial markets.”

“The Indian economy has good fundamentals, low short term external debt, and sizeable foreign reserves. These should stand the country in good stead in the days to come,” he added.

Britain’s monumental and historic decision to move out of the 28-member European Union (EU) had a dramatic and telling impact on the Indian share market where the BSE Sensex lost 1034 points to quote at 25,968 and the Nifty shed 328 points to trade at 7,942.

“The government is prepared for all eventualities. As far as the stock markets are concerned, it is an initial reaction, because what is happening is going against their expectations,” Economic Affairs Secretary Shaktikanta Das told media here.

Commenting on the market situation Das said this is an instant reaction and that it should stabilise over the next few days.

“The markets hopefully will improve in coming days,” he said.

Das further said that the government, the finance ministry and the Reserve Bank of India has been working on this issue.

According to a statement released today, Jaitley said that India respected the referendum’s verdict but at the same time was aware of its significance in the days ahead and also for the medium term.

“As I have often said, in this globalized world, volatility and uncertainty are the new norms. This verdict will, obviously, further contribute to such volatility not least because its full implications for the UK, Europe and the rest of the world are still uncertain. All countries around the world will have to brace themselves for a period of possible turbulence while being watchful about and alert to, the referendum’s medium term impacts,” Jaitley said.

Confident that the Indian economy can brace itself from the consequences of Brexit, the Finance Minister added that India remains committed to its macro-economic framework with its focus on maintaining stability.

According to reports, the Indian rupee is headed for the biggest decline since 2013 as the U.K.’s referendum results pointed toward a vote to leave the European Union.

The rupee lost one percent in opening trade on early trends that Britain would leave the EU following a nationwide referendum. (ANI)

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