With the currency continuing to hover around the Rs 60 level against the dollar, key policymakers led by Finance Minister P. Chidambaram went into a huddle for the second time in eight days to chart out a possible policy response to arrest the fall.
Earlier in the day, the Finance Minister also met Prime Minister Manmohan Singh.
After his meeting with Singh, Chidambaram met with the Governor of Reserve Bank of India D. Subbarao.
Economic Affairs Secretary Arvind Mayaram, Chief Economic Advisor Raghuram Rajan, and Additional Secretary (Economic Affairs) K.P. Krishnan besides other officials also attended this meeting.
Later Subbarao had a separate meeting with Mayaram and others. The discussions lasted for nearly two hours.
There was no official word on what transpired in the meeting. But the market buzz was that the Government was considering issuing dollar-denominated sovereign bonds to raise foreign exchange and stem the fall of the rupee.
The rupee dipped to Rs 59.86/dollar on Monday, against Friday’s closing of Rs 59.60. To add to the worries, India’s forex reserves have fallen to $280 billion.
A sovereign dollar bond may help improve the forex reserve situation, experts say. Such bonds help in mobilising funds from abroad. Last week, Chief Economic Advisor Raghuram Rajan met with top investment bankers and custodians of foreign investors. He had then said that many ideas, including sovereign bond issues or NRI bond issues, had been discussed.
“All options are on the table and we will examine them. As and when the need comes, we will take the options,” he had mentioned.
There have been three occasions when the Government or Government-backed institutions issued overseas bonds.
First was the India Development Bonds, issued in 1991. Then there was the Resurgent India Bond issue in 1998, which raised $4.2 billion. The last such issue was the India Millennium Deposits in 2001, which collected $5.5 billion.
shishir.sinha@thehindu.co.in