New Delhi: ICICI Bank CEO K V Kamath on Thursday said there are no indications from the market to signal change in interest rates at the moment, even though RBI is sucking out over Rs 27,000 crore from the system.

He also attributed weakening of rupee against dollar to expectations of stable interest rates regime in the US, which has also made the greenback stronger against other currencies.

"At this point of time I think no change (in interest rate) is seen," he told reporters on the sidelines of a presentation by renowned economist, C K Prahlad.

Kamath, who is also president of industry body CII, said at this point of time the market has not judged which way interest rates are going, but if yield on 10-year government bond is taken as an indicator, there is in fact a drop in interest rates. ICICI Bank is the country's second largest lender.

Bankers and market players will need signals as to what is the true level of interest rates, he said, adding that there are no indications to say that interest rates would change at this moment.

The Reserve Bank had last month announced a 0.75 per cent hike in cash reserve ratio to 8.25 per cent that would enable the central bank to absorb over 27,000 crore from the banking system.

Kamath said liquidity is quite "good" in the market and hence it is the market which would determine interest rates now.

On rising global crude oil price, which has crossed the USD 122.31 per barrel mark, Kamath said its impact on day-to-day life of Indians has diminished.

"Given drivers of our growth, impact of oil in day to day life is getting less. This is not to say that it is not a pain but pain could be borne," he said.

"Five to ten per cent change in global crude oil prices from this level would not make for a dramatic increase in the level of suffering that we faced when prices went up from 35 dollars a barrel to over Rs 120 dollars," Kamath said.

When asked about his comment on the RBI's move to increase the limit of bank loans having lower risk weight of 50 per cent enhanced to Rs 30 lakh, he said banks would decide about the rates on housing loan as they go along.

On the outlook on rupee, which has witnessed a decline against dollar, Kamath said in the short term one cannot make a forecast but in the long run the Indian currency will strengthen because the economy is strong.

He attributed the fall in rupee value against dollar to recent slackening of capital inflows and expectations that interest rates would remain in tact in the US as the financial problem in that country is half way through.

"I think what we need to see is what has happened to dollar in the last few days. There have been statements from the US Treasury Department that they believe the US financial sector problem is more than half way through. If it more than half way through, then expectations of the market may not be rate cuts," he said.

If there are no rate cuts, then there is a correction taking place in the exchange rate. So the dollar has got stronger against most of the currencies, Kamath said. Secondly, at this point of time capital flows are a little bit slack, he said.

Asked about the impact of weakening of rupee, Kamath said, "I think we have to wait and watch. Some people would be smiling... Those who are importing may not be too happy."

Source : PTI