"I think the RBI should intervene in the situation when volatility in exchange rate is high," the chairman of the Economic Advisory Council to Prime Minister Manmohan Singh said Friday.
Rangarajan's comment comes after Subir Gokarn, deputy governor of the apex bank, in a television interview said that any attempt to control the falling rupee will be a "risky strategy" in the global economic scenario.
"RBI has the responsibility in terms of reducing exchange rate volatility," Rangarajan said.
Stating the global economic situation was not "encouraging", the renowned economist said he expected India's Gross Domestic Product (GDP) will be 7.5 percent to eight percent at the end of the current fiscal.
He also said he expected the country's current account deficit to be about 2.7 percent of the GDP in FY12.