RBI chief Raghuram Rajan reassures markets, says India's fundamentals better than many others

As stocks and rupee hit new lows, Reserve Bank of India (RBI) Governor Raghuram Rajan allayed fears citing strong macroeconomic fundamentals of the country, which are much better than many others.

"I wish to reassure the markets that our macro-economic factors are under control as the economy is in a much better position relative many other economies," Rajan told the national banking summit organised by the IBA and Ficci in Mumbai on Monday.

In its biggest intra-day crash this year, the market benchmark Sensex plunged by 1,006 points while Nifty fell below 8,000-level in early trade due to heavy selling by funds amid global sell-off. Asian markets were in deep red with Shanghai shares crashing 8 per cent on concerns that the Chinese economy was slowing more than previously thought.

All 50 constituents of Nifty are in red with Tata Motors and ONGC losing the most up to 6 per cent.

Amid free fall in stock markets, the rupee on Monday crashed to 66.49 against the dollar, plunging a whopping 66 paise. The rupee has not seen such a low level in almost two years in opening trade on sustained capital outflows even as the US currency weakened overseas.

The RBI Governor said that turmoil in currency market has been long-coming and China is only the last step in it. Rajan however said rupee has strengthened against yen and euro, and RBI has resources to deal with rupee volatility.

Rajan said the country has $380 billion in forex reserves to be used as and when the need arises. The Governor also hinted at lower rates.

"Falling commodity prices and astute food management by the government should help RBI (lower rates)," said Rajan. He also said he sees oil prices remaining at low levels at for a year or two.

Meanwhile, crude prices fell after slipping below $40 barrel for the first time in six years after weak Chinese manufacturing data.