ST PETERSBURG: India today said it has "adequate" foreign exchange reserves -- at present USD 280 billion-- to defend its currency amid global volatility and ruled out taking any external assistance unless there is a "radical" change in the situation.
Planning Commission Deputy Chairperson Montek Singh Ahluwalia also said the rupee's fall this year has clearly overshot limits.
"With 280 billion dollars in reserves, I don't think we will be drawing on currency swap arrangements unless there is a radical change in the situation," said Ahluwalia, who is the 'sherpa' to Prime Minister Manmohan Singh at the ongoing summit of the Group of 20 industrialised and emerging economies.
Ahluwalia also reiterated that some depreciation of the Indian rupee -- which had touched historic low of close to Rs 69 last month -- was justifiable.
"But when it was close to Rs 69 there was clear overshooting and the extent of rupee was not all connected with high market volatility," he said, adding that economists, working on varying assumptions, had estimated the rupee's value at anything between 59 and 65 rupees against the USD.
"Some depreciation was justifiable. But when it was 69 there was clear overshooting that was not desirable," he said.
He said currency markets had "over reacted" against the backdrop of a global volatility in the currencies of emerging economies in the wake of the imminent phasing out of fiscal stimulus by the US. The Federal Reserve mulled an early pullout of the USD 85 billion-a-month.
Referring to a Contingency Reserve Arrangement (CRA) being worked out by the five-nation BRICS to help members draw funds from a common USD 100 billion facility, Ahluwalia said it is not yet clear what are the terms on which one can draw.
India has pledged 18 billion.USD to the fund. BRICS comprises Brazil, Russia, India, China and South Africa and their leaders met informally yesterday on the sidelines of the summit's margin to work out a joint coordinated plan.
Prime Manmohan Singh in his address at the G20 summit had called for a coordinated policy to end unconventional monetary measures to curb undesirable currency swings.
"What is not yet clear is what are the terms on which you can draw," Ahluwalia said, adding it constitutes a pledge and does not involve a upfront contribution
It will involve some interest payments and also be linked to the percentage share of the contribution of each member to the fund, he added.
He, however, did not visualise a situation where India may have to draw from the 100 USD CRA.
India already has a USD 15 billion bilateral arrangement for a currency swap loan from Japan, and that also is not required now, Ahluwalia said. "All this is only a second line of defence," he added.
Ahluwalia indicated that India also has the intermediate option of increasing its contribution to the International Monetary Fund from its reserves and boost its currency cushion.
"Markets would take note of that," he said.
