RBI keeping an eye on movement of rupee: Pranab

With the rupee depreciating to a new 32-month low against the US dollar, Finance Minister Pranab Mukherjee today said the Reserve Bank is "keeping an eye" on the situation.

"The RBI is keeping an eye on it (depreciation of rupee). They are watching the situation at the appropriate level," Mukherjee told reporters on the sidelines on the Vatsalya Mela 2011 here.

His comments came a day after the Indian rupee plunged to a 32-month low below Rs 51 per US dollar on persisting demand for the US currency from banks and importers.

At the Interbank Foreign Exchange, the domestic currency closed 44 paise lower at Rs 51.34/35 per dollar yesterday.

The market was abuzz with speculation that the RBI has asked public sector banks to release dollars to arrest the fall of the rupee.

Asked what would be a comfortable rate of exchange and the likelihood of intervention by the central bank, Mukherjee said: "I am not guessing anything and I am not finding what is comfortable level. I am depending on the advice of the RBI."

The Indian rupee is the fourth most depreciated currency in the world and the most depreciated in the Asian continent.

The RBI has attributed the movement to demand-supply factors and said it is happening globally.

A weaker rupee is a matter of concern for India as it depends on imports for over 70% of its oil and gas requirements and the depreciation of the local currency has made imports more expensive.