<div>Reserve Bank of India Governor Raghuram Rajan said on Friday that he was confident that the current account deficit could be financed this year without suffering a substantial drawdown in foreign exchange reserves.</div><div> </div><div>India needs to withdraw liquidity measures, introduced in July to stabilise the rupee, as soon as market conditions allow, Rajan told a press conference after conducting his first policy review since becoming governor.</div><div> </div><div>Rajan surprised markets by raising interest rates to ward off rising inflation while scaling back some emergency measures put in place to support the ailing rupee.</div><div> </div><div>India's foreign exchange reserves fell to $274.806 billion as of 6 September, compared with $275.49 billion in the earlier week. The country's record-high current account deficit has made it especially vulnerable to the flight of funds.</div><div> </div><div>More Freedom To Market Participants As Rupee Stabilises</div><div>The RBI also said it would allow more freedom to market participants engaged in foreign exchange trading as the rupee stabilises.</div><div>Reuters had earlier reported that the Reserve Bank of India (RBI) had relaxed intraday foreign exchange trading position restrictions that it imposed on some banks back in June.</div><div> </div><div>Rajan, speaking to reporters after the RBI's mid-quarter policy review, said he does not anticipate a new set of rupee stabilising measures since the US Fed had decided to postpone tapering its bond buying programme. Rajan said capital flows into the country cannot be directly linked to the prevailing repo rate.</div><div> </div><div>(Reuters) </div>
