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The rupee is not expected to fall further in the immediate future and the current exchange rate of Rs 53-55 vis-à-vis the dollar is the new normal, says a survey by the Confederation of Indian Industry (CII).
The survey covered 35 economic analysts from across the industry.
Sixty per cent of economists surveyed believe that the rupee will remain at current levels of Rs 53-55 and that this level represents the medium-term trend.
Mr Chandrajit Banerjee, Director General, CII, said “The Indian rupee has declined more than the troubled Euro currencies, dropping as much as 25.58 per cent between June 30, 2011 and June 30, 2012.
Volatility
“The high rupee volatility has added to the complexity of business in the country, and the government and the Reserve Bank need to jointly find a solution.” The main factors for the decline, pointed out by respondents, were high current account deficit, policy inaction and high fiscal deficit.
FII policy
The analysts suggested some steps such as review of the foreign direct investment policy in critical sectors, direct payment to oil companies from reserves, issuance of dollar-denominated bonds, deregulation of oil prices and further increase in foreign institutional investment limits in the debt market.
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