By KHUSHITA VASANT MUMBAI – The Reserve Bank of India should use its more than $288 billion of foreign exchange reserves to intervene in the currency market and arrest the rupee's slide, a senior adviser to the central bank said Friday. "It's not that once you get [past] some threshold [of reserves], you should never use it. What have you got it for?" said Ashima Goyal, a member of the RBI's technical advisory committee. Members of the panel determine India's monetary policy formulation. She said the central bank would be justified in dipping into its reserves to support the local currency as India is being buffeted by global headwinds and poor risk sentiment. "If they [RBI] intervene using $20 billion, that's not a big deal. It should be done," Ms. Goyal said. The Indian rupee has been among the worst-performing Asian currencies, weakening nearly 10% against the dollar since mid-March. It hit a record low of 56.51 against the greenback on May 31. The rupee has been under pressure as India grapples to finance yawning fiscal and current-account gaps, which are driving investors away. Uncertainty in Europe and sluggish growth in developed economies are also adding to its woes. The RBI's frequent dollar sales have been eating into India's forex reserves, which fell to $288.26 billion as of May 25 from $306.78 billion in early December. To support the rupee, the RBI also imposed restrictions on forward currency trades and raised the interest rate ceiling on foreign currency deposits to lure more money into the country. Some economists say the rupee's 10% fall over the past three months has made exports competitive, and eased monetary conditions by the equivalent of at least a one percentage point rate cut. Ms. Goyal added that the central bank now has some room to cut rates due to a fall in global crude-oil prices. India imports about 80% of its oil requirements. "Since oil prices are coming down, that reduces the impact of [the rupee's] depreciation on inflation," Ms. Goyal said.

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