India would not be concerned if the rupee currency fell to 80 against the dollar after hitting an all-time low of 70.1/$ on Tuesday, as long as other currencies also depreciated, a senior finance ministry official said.
The rupee, which has fallen more than 8% this year, has pushed up prices of imported items such as petroleum products, commodities, electronics and engineering equipment, creating a headache for Prime Minister Narendra Modi ahead of a general election due early next year.
Any intervention by the Reserve Bank of India (RBI) will not help much to stabilise the rupee as the fall in the currency is due to global factors, top finance ministry official said on Tuesday.
“RBI’s intervention by selling dollars in the market will not help much at this stage to stabilise the rupee. It is a global phenomenon,” Department of Economic Affairs (DEA) Subhash Chandra Garg secretary said.
He said that the rupee had not depreciated much as compared to 2013 level of 69.
“Even if the rupee falls to 80, it will not be a concern provided all other currencies depreciate in the same range,” he said.
Garg said that the rupee was performing better than the other currencies. “RBI has sufficient forex reserves. So far, it has spent $23 billion to intervene in the market,” he added.
He said the rupee’s fall was mainly due to external factors and any further selling of dollars by the Reserve Bank of India (RBI) - it has already spent about $23 billion on intervention - may not help to further stabilise the rupee.
Analysts said the falling rupee could lead to higher inflation as Indians pay more for imported goods and services. Opposition politicians blamed the government’s economic policies.
“The Indian rupee just gave the supreme leader a vote of no confidence, crashing to a historic low,” Rahul Gandhi, president of the main opposition Congress party, said in a tweet referring to his rival Modi.
(With inpust from Reuters)
