Rbi Will Stem Re Slide: Hegde
Union commerce minister Ramakrishna Hegde has said the Reserve Bank of India (RBI) would take steps to arrest a decline in the rupee.
Hegde told newspersons that the value of the rupee will stabilise at the current level in a couple of weeks.
He also said that the central bank had a role to play in halting the fall of the rupee.
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"The RBI also has a role to play. It has already reduced rates on exports finance credits. It determines the credit policy and the liquidity ratio and all these factors play a role in stabilising the rupee," Hegde said.
The minister also said the rupee would stabilise soon. "It would stabilise at more or less at the present rate. By the year end, the rupee will come back to its earlier position of below 40 to a dollar," Hegde said.
The rupee over the last few weeks has fallen sharply and hit Rs 42.38/ 40 per dollar on Tuesday.
Hegde also added that he did not favour depreciation of the rupee to boost exports. "Whenever any country devalued its currency, its exports increased dramatically but I am not in favour of devaluation because there are other implications," he said.
Hegde said devaluation would affect the country's liabilities and increase the costs of raw material imports.
"So the cost of everything will go up. This aspect should be kept in mind before a decision on devaluation is taken."
Hegde said India's economic growth had slowed down for three years mainly because of the financial crisis affecting other parts of Asia.
"This crash was bound to have some implications for us because we are so close to these countries. We cannot be insulated from the impact of that collapse."
Hegde said the sanctions imposed by the US and other countries would be ineffective and hence there was no need for India to be unduly worried.
He recalled that the US had imposed similar sanctions on China when the country conducted a nuclear test in 1994.
"But the sanctions have got watered down over the years and now the US has no qualms about increasing their trade with China," he said.