A customer holds Indian rupee banknotes. (Photographer: Dhiraj Singh/Bloomberg)

Rupee Likely To Stabilise At 68-69/$, Says Economic Affairs Secretary

The rupee, which has taken a severe battering of late, is expected to stabilise at 68-69 per U.S. dollar level riding on positive capital inflows this month, Economic Affairs Secretary Subhash Chandra Garg today said.

The rupee is Asia's worst performing currency and had touched an all-time low of 70.09 against the dollar on Tuesday.

According to Garg, the current turmoil in Turkey, triggered by U.S. sanctions, had not affected the perception of India. The flow of foreign portfolio investments had not altered either and there had been no outflow in July, Garg said while speaking at an interactive session organised by the Merchants' Chamber of Commerce and Industry in Kolkata.

During the first three months, there had been outflow of capital and in the last year the total outflow was $20 billion, he added. “If oil prices do not rise further, the chances of the rupee stabilising at 68-69 level is more,” Garg said.

When asked how the rupee will be affected if China devalued its currency, he said that for the first time in the last 20 years, the Chinese economy had experienced current account deficit.

“Now China's exports and imports are altering fundamentally. So far, the depreciation of the Chinese yuan was not so high. Even if the Chinese currency is devalued, India will not be affected as long as the depreciation of all currencies vis-a-vis the dollar was similar,” he added.

There would be no problem as terms-of-trade would not change, Garg said.

“However, we are watching closely to what extent China devalues its currency,” he said.

Owing to high oil prices, India's current account deficit had risen to 1.9 percent for which the rupee was depreciating. This called for a need for higher capital inflows, he added.

Also read: Rupee Breaches 70 a Dollar as Turkey Rout Complicates RBI's Job