Rupee vs Dollar: Government, RBI vigilant on currency fall; Experts predict more pain ahead

Rupee vs Dollar: The Finance ministry stated that government and the RBI will do everything to ensure that the rupee does not depreciate to ‘unreasonable levels’.

Rupee vs Dollar: The Finance ministry stated that government and the RBI will do everything to ensure that the rupee does not depreciate to ‘unreasonable levels’. (Image: PTI)

Rupee vs Dollar: After the rupee touched a historic low mark of 72.69 against the US dollar, Indian government and the Reserve Bank of India (RBI) has ensured that required measures will be taken to stop the currency depreciation. The government and the RBI will do everything to ensure that the rupee does not depreciate to ‘unreasonable levels’, the finance ministry said after the currency fell to a lifetime low on Tuesday. Surge in crude oil prices and foreign funds outflow have been major drivers for rupee becoming the worst performing currency in Asia, registering a year-on-year fall of almost 13 percent. Taking to Twitter, Subhash Chandra Garg, Secretary, Department of Economic Affairs said, “Government and RBI will do everything to ensure that rupee does not slide to unreasonable levels. Today’s correction seems to reflect that realisation.” Garg also mentioned that there were no fundamental rationale for falling of rupee to the levels till Tuesday. As per a recent data released by the RBI, India’s current account deficit (CAD) elevated to 2.4 per cent of gross domestic product (GDP) during the April-June period compared to that of 1.9 per cent in January-March quarter of 2017-18. Several industry analysts believe that Indian currency could continue to shed further in the time to come. “Certain intervention could restrict the pace but bias for the rupee is still negative. Rupee, in the short term, could test levels of 73.20 and break above 72.15 could negate the view for short-term weakness,” Gaurang Somaiya, Currency Analyst, MOFSL was quoted as saying by PTI. Experts also believe that the deficit gap can be lessened by reducing the imports. As off Tuesday, rupee traded in a range of 71.86 to 72.91 during the day and after dipping to a historic low of 72.74, the local unit finally settled at 72.69, with a loss of 24 paise, or 0.33 per cent.