Finance Minister P Chidambaram on Thursday said there is no need of panic over rupee depreciation against the dollar and assured investors that policymakers will take steps to curb volatility in the forex market.
New Delhi: Finance Minister P Chidambaram on Thursday said there is no need of panic over rupee depreciation against the dollar and assured investors that policymakers will take steps to curb volatility in the forex market.
"I don't think we need to panic about what is happening in rupee. Yes, it does put pressure on inflation, it puts pressure on subsidy bill, specially on imported commodities. But I think rupee will find its level. And I think authorities will take measures to ensure there is no volatility," he told reporters here.
The Minister further said the rupee will regain the ground it lost against other currencies in the past few days.
"The rupee will find its level and its quite possible that rupee will regain some of the losses it suffered in last few days," Chidambaram said.
Recently, the Reserve Bank liberalised norms for repatriation of exports proceed and also asked units in the special economic zones (SEZs) to bring back export earning to India within 12 months from the date of shipment.
Chidambaram further said what is happening with rupee is not unusual to India as currencies of countries with high current account deficits are taking hit.
"I believe due to misinterpretation of (US Federal Reserve Chairman) Ben Bernanke statement and some other factors, all countries with CAD have taken hit on currencies. But that does not mean, rupee will continue to depreciate.
"Rupee will find its level. We are concerned about the volatility," he said, adding for about 10 months -- from August 2012 to nearly end of May 2013 -- rupee was remarkably stable.
Rupee, which had touched life time low of 58.96 against the US dollar on Tuesday, was trading above 58 level today.
The Finance Minister said that the domestic currency must find its correct price and correct level.
"CAD in the current year, very initial estimates say, will remain approximately at the same level as last year. But, we are confident that we will be able to fully finance it without drawing down the foreign exchange reserves," he said.
On NRI bond, Chidambaram said: "We can't answer on issues on which decisions have not been taken".
He said the government is watching foreign inflows and expressed confidence that the inflows will be copious and robust.
"Inflows will still happen. What has happened in the last few days does not mean inflows will not happen. We will watch the situation and will take a decision. Example, the decision yesterday, is intended to facilitate more inflows," he said.
India yesterday raised the limit for foreign investment in government dated securities by USD 5 billion to USD 30 billion.
The enhanced limit of USD 5 billion will be available only for investments in government dated securities by long-term investors registered with Sebi - Sovereign Wealth Funds (SWFs), Multilateral Agencies, pension/Insurance/ Endowment funds, foreign central banks.