By MUKESH JAGOTA NEW DELHI -- Developing the Indian rupee into a currency for global trade isn't on the central bank's agenda for the near-to-medium term as the local economy doesn't have the scale to support such a move, a deputy governor of the Reserve Bank of India said Tuesday. "We have to reach a point in the overall international transactions matrix that makes people to want to hold the currency," Subir Gokarn said at a conference. India's partly convertible rupee isn't a preferred choice for payments among most of its trading partners, which rely on the U.S. dollar for most cross-border transactions. His comments come amid concerns that the central bank could go back on its long-term aim to make the rupee fully convertible--a requirement for its internationalization--if the risk of the local currency's depreciation escalates. In December, the Reserve Bank had said it would consider imposing strategic capital controls as the rupee was falling sharply against the dollar. The local unit fell to a record low of 54.2925 to the greenback on Dec. 15. India had removed all restrictions on its current account in the 1990s, soon after it enacted economic reforms, and has since been gradually easing restrictions on its capital account. Mr. Gokarn said the focus of the central bank's strategy in the short-to-medium term would be a gradual liberalization of the capital account. Speaking to reporters on the sidelines of the conference, he said whether or not the central bank has room for monetary policy actions to stimulate growth would depend on how commodity prices behave. The central bank is under pressure to begin unwinding the 13 rate increases it carried out between March 2010 and October 2011 to stimulate growth, which fell to 6.1% in the October-December period, its slowest pace in more than two years. At its rate-setting meeting Thursday, the Reserve Bank still left its key lending rate unchanged, saying that risks to inflation have increased due to a recent spurt in crude oil prices, a wide fiscal deficit and a weakening rupee. The hawkish tone on inflation has prompted a number of investment banks such as Nomura India and Standard Chartered Bank to slash their rate-cut forecasts for the fiscal year starting April 1. Write to Mukesh Jagota at mukesh.jagota@dowjones.com

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