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Don't overreact to weakening rupee: Commerce secy

Press Trust of India  |  New Delhi 


Commerce Secretary Rahul Khullar today said there is no case for over-reaction to the weakening of rupee, which has touched an all-time low of Rs 52.73 to a dollar.

"I think you should not over-react to movements of exchange rates. Don't get carried away by what has happened. Things can improve and change equally and suddenly," he told reporters on the sidelines of an APEDA event here.

The Indian currency dropped to a lifetime low of Rs 52.73 per US dollar in early trade on persistent demand for the US currency from importers, amid sustained foreign capital outflows from the equity market.

Khullar said preferences of global investors have changed in the face of recent events in Europe and the US. "Asset preferences drive investors into taking decisions which affect not only exchange rates but also prices of commodities."

Shuffling of investment portfolio has led to increased demand for the dollar and other commodities worldwide.

However, in a fast-changing scenario change could be equally fast, he said.

A sharp fall in rupee value has generally helped exporters, but left a negative impact on imports and would make it difficult for the government to cope up with near double digit inflation.

First Published: Tue, November 22 2011. 15:56 IST