He also hinted that the interest rates at the medium and long end have started firming up.

According to Verma, the current state of affairs in the forex market is not a reflection of the fundamentals of the Indian economy. "The rupee has been largely driven down against the dollar by speculators. It's largely psychological.... The fact that the FII and FDI inflows are down has added to the sentiment. The speculators are in the market," Verma said.

On Thursday, the Indian currency gained on exporters' dollar-selling to touch an intra-day high of 41.85/88, but closed at 42.19/22, losing seven paise from the closing level of 42.11/14. "The movement of the rupee over the last 15 days has nothing to do with fundamentals of the economy. In my view the present level of the rupeeis the right level. I would say it may gain or slip by another 50/60 paise. That is the band I am talking about," Verma said.

The SBI chairman categorically ruled out any intervention in the forex market. "The bank will not enter the market to manipulate (the level of rupee)... We will buy or sell dollars in accordance with the need of our clients. We will continue to do so," he said.

On the movement of interest rates, Verma said there have been indications that the rates will move northwards. "The present level of low interest rate will not last. It will go up soon. The coupon on new government papers bear testimony to that," he said.

The Reserve Bank of India has jacked up the coupon on the 10-year tap stock by 10 basis points and the six-year stock by 25 basis points. Both the tap stocks will open for subscription on Friday.