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The government is contemplating measures to stem the fall in the rupee as the Indian currency hit a new all-time-low of 61.20 against the dollar in morning trade on Monday.
A senior finance ministry official said the government has already taken some steps to arrest the depreciation in the rupee and would continue to take more measures to stabilise capital flows.
“We have taken a number of measures and will continue looking at other measures. It is a continuous process by which we are trying to find some stable flows,” the official said.
The rupee touched its lowest level against the dollar early on Monday on fears the US Federal Reserve could roll back its stimulus programme on the back of a strong job data released last Friday. Later in the day though, the Indian currency recovered to close at 60.62 against a dollar.
Though the government was concerned about rupee volatility and wanted it to find a level, the official added, weakness in the rupee witnessed on Monday was in line with expectations.
“There was an expectation that there would be pressure on all currencies on Monday because of what has happened in the US. So, I think this is consistent with the expectation. I don’t think there is any big piece of news that has come out that should worry us,” he added.
As the rupee is hovering around 60-61 to a dollar for the last few days, Finance Minister P Chidambaram had called a meeting of key government functionaries on Sunday to discuss the issue. It was attended by Reserve Bank of India (RBI) Governor D Subbarao, Planning Commission Deputy Chairman Montek Singh Ahluwalia, Prime Minister’s Economic Advisory Council Chairman C Rangarajan and Economic Affairs Secretary Arvind Mayaram.
The direct role of arresting the rupee slide comes in the domain of the RBI, which has been intervening in the foreign exchange markets. The government, on its part, is exploring options to attract inflow of foreign investments into the country, including portfolio investments, as well as foreign direct investments.
According to a survey by industry chamber, around 56% of the respondents expect the rupee to trade above the Rs 59 to a dollar mark by end-September. Another 15% expect it to remain in the vicinity of Rs 58-59, while around 22% displayed cautious optimism with the rupee rising marginally to 57-58. Only 7% expect it to bounce back to Rs 56-57.
