GOI Asks People Not To Panic After Fall of Indian Rupee Compared To US Dollars Due To External Factors

GOVERNMENT on Tuesday assured the people that corrective measures   are being taken post fall in rupee value against the US dollar. Economic Affairs Secretary Subhash Chandra Garg said that the problem is due to external factors. There is nothing to worry about as long as the depreciation is in line with other currencies. The rupee collapsed to as low as of 70.09 during the day on global concerns over Turkey’s economic woes which have impacted various emerging markets amid the US dollar gaining strength against other currencies.”Rupee is depreciating due to external factors…nothing at this stage is to worry. Government  is hopeful  external factors may not  last  long .Even if the rupee falls to 80 per dollar, “it will not be a concern provided all other currencies depreciate in the same range”. The Indian currency, he said, is still better as compared to certain other currencies. In the current financial year from April 1 to March 1 31 ,2019 , the rupee has depreciated around 6.7% against the US dollar. arg also said that while the Reserve Bank of India had sufficient foreign exchange reserves, its intervention in the currency market may not be of much help as of now, as the weakness in the rupee was a result of global factors. RBI’s foreign exchange reserves were at USD 402.70 billion in the week ended August 3, down USD 1.49 billion over the preceding week, latest data released by the central bank showed. RBI’s stated position is that it does not seek to target a particular level for the rupee’s exchange rate against the dollar, and uses its reserves to ease volatility in the currency market. State Bank of India Chairman Rajnish Kumar said all currencies have weakened against the dollar, but the Indian currency has not weakened very much in comparison to other currencies.”I feel that it (rupee) should stabilise between 69 and 70 because if you look at the numbers for investment which is coming into the country — investment in bonds, investment in equities — this level has become attractive for foreign investment,” Kumar said.B Prasanna of ICICI Bank said the rupee is the victim of a contagion effect impacting all Emerging Markets (EMs) triggered by the Turkish crisis. “The gradual pace of depreciation witnessed till the 69 figure levels are a result of the Yuan depreciation and the current account deficit worsening sharply from 0.6 per cent of GDP in FY’17 to an expected deficit close to 2.5 per cent of GDP this year, stemming from surging oil prices and worsening of the already negative basic Balance of Payment (BoP),” he said.(with  The Business Standard inputs )