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'Measures To Stabilise Rupee Mustn't Hit Growth'

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Hours after the Reserve Bank said that stabilising the battered rupee is its priority, Chief Economic Adviser to Finance Ministry Raghuram Rajan said RBI's action in this regard must not hurt the growth too much.

"RBI has come up with measures to put stability in the exchange rate. With these measures I hope there should not be serious consequences to growth. We must try to ensure that growth is not diminished," Rajan told a summit organised by the NSE, through a video link, this evening.

The rupee strengthened to 58.69 to the dollar after the RBI first unveiled its measures on July 15, but has not closed below 59 since then and remains close to 60 levels after it had hit a record low of 61.21 on July 8.

Earlier in the evening, the RBI said it will follow a cautious monetary stance, with focus on stabilising the domestic currency and containing the current account deficit.

Hinting at a status-quo in tomorrow's policy review, the RBI's first quarter macroeconomic and monetary development report said: "The priority for monetary policy now is to restore stability in the currency market so that macro- financial conditions remain supportive of growth," even though it admitted that growth recovery is likely to be slower.

Meanwhile, earlier in the day, Finance Minister P Chidambaram had said that the RBI should also look at boosting sagging growth and generating employment while focusing on price stability.

"All over the world thinking in changing. The mandate of a central bank must not only be price stability. The mandate of central bank must be seen as part of larger mandate which includes price stability, growth and maximising employment," he said while addressing a function of daily Divya Bhaskar.