Mumbai: Reserve Bank of India is buying foreign exchange from the market in major way to build adequate reserves to meet external obligations for next 12 to 18 months, RBI governor Bimal Jalan said on February 8.

The apex bank is buying forex to ensure that even if India goes through tremendous uncertaintity "we should have strong reserves to cover our liquidity at risk of foreign institutional investors, short term debt etc", Jalan said at NASSCOM 2002, the international IT conference in Mumbai.

"Our policy is to have a forex reserves to meet all obligations for a reasonable period of 12 to 18 months. We have thin markets and want to have orderly forex market," he added.

The Reserve Bank of India was not targetting any specific level of Rupee, governor said.

India's foreign exchange reserves stood at robust $ 49,252 million, a record high, during the week ended January 25, 2002.

Jalan said fundamentals of the economy were strong with low inflation and low interest rate scenario. Low inflation rate "will have no adverse impact on the Indian economy", Jalan had said earlier.

"There is no possibility of deflation now. Any adverse effect of low inflation regime referred in RBI's currency and finance report for 2000-01 was in relation to a medium term perspective," Jalan had said.

PTI