Don’t Compare Brexit With the 2008 Recession, Says Raghuram Rajan
Rajan says RBI is ready to provide the needed liquidity.
Following the EU referendum in favour of Leave, Reserve Bank of India Governor Raghuram Rajan assured India that its market implications cannot be compared to the 2008 financial crisis, according to ET Now.
Earlier in the day on Friday, the UK – in a historic referendum – voted to leave the EU. Soon after, there was a steep fall in the value of the pound. Indian markets, too, fell sharply in line with its global peers.
Rajan, who recently announced his decision to depart from the RBI in September, promised to provide liquidity and correct any disorderly market behaviour following the UK’s vote. He said after initial investor worries over Brexit, the funds should return to India.
In a conference call from Basel, Rajan argued that all the markets seem to be working, and “if there are disruptions in the markets and liquidity is not available from certain quarters,” the RBI is ready to provide whatever liquidity is required.
While Rajan predicts volatility in the market, he’s confident that India is “relatively well-placed,” and is not as vulnerable as other economies.
Stressing on ‘Making in India’, he seemed optimistic about a good monsoon, and a strengthened domestic demand.
While the US Federal Reserve has found another reason to wait before raising interest rates Rajan said the delay will only help in adjusting to the Brexit shock.
He added that the Indian currency has shown one of the more stable reactions in comparison to currencies around the globe and as such the rupee’s fall does not bother him.
(With inputs from PTI.)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)