Volatility in the foreign exchange market will remain until the euro zone crisis is

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resolved, RBI governor Duvvuri Subbarao said on Friday.

Subbarao said in a speech in Chandigarh that the central bank is watching the rupee, but could not say whether it will intervene in forex market directly.

The rupee has skidded nearly 17 percent from a 2011 high reached in late July as risk-averse investors flee emerging markets, increasing the difficulties for a government already struggling with high inflation, slowing economic growth and a widening trade gap.

The rupee touched an all-time low of 52.73 on Tuesday and state-run banks were spotted selling dollars in the market in recent sessions, sparking talk of RBI intervention.