Attributing the slide in rupee value to various domestic and global factors, the Finance Minister, Mr Pranab Mukherjee, today said the Reserve Bank was taking steps to arrest the currency’s depreciation.
“There are a lot of reasons for this (depreciation). There is demand and supply in the market. In the US, there is surplus investment. It used to be a safe haven,” he told reporters here.
“Europe used to be an important destination for exports, but demand there is uncertain,” he said, adding global recovery was “poor and fragile” while oil prices were on rise.
India’s fiscal deficit too is widening and is estimated to have touched 5.9 per cent of GDP in 2011—12.
“Because of the cumulative effect of all these reasons the price of rupee is falling down,” he added.
Mr Mukherjee said the RBI was taking steps to check the depreciation in the Indian currency from time to time.
The RBI recently indicated that it may sell dollars directly to oil companies to ease pressure on the currency. Besides, it has already taken steps to curb speculation in the forex market and increase the inflow of foreign currency.
Since early March, the rupee has lost about 13 per cent against the dollar driven by a combination of deteriorating global risk sentiment and weak domestic fundamentals.
The rupee had hit an all-time high of 56.38 on Thursday.
On Friday, the rupee gained 27 paise to close at 55.37 after the RBI intervened on currency breaching the 56-level in early trade.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.