Rupee At All-Time Low, Finance Ministry Sources Say Not Due To Economy

With the rupee hitting a new record low of 82 against the US dollar on Wednesday, Finance Ministry officials maintained that the fall was not because of the state of the Indian economy, but because of the strengthening American currency.

"Wherever there is a dollar trade, like crude, we will be impacted. Crude is where we have been impacted. This is something we will have to live with, and it has nothing to do with the Indian economy," a senior official, who requested not to be named, told NDTV.

"The rupee has not fallen. It's only with the dollar. We are not for intervention and don't want to do this. This is a result of the tapering effect that has been done slightly excessively," they said.

Despite the decision to extend the free ration scheme for the seventh time, the fiscal deficit will still meet the budget target of 6.4 per cent of the GDP for this year, the official added.

The rupee plunged below the 82-mark for the first time in day trade before settling down by 40 paise at 81.93 against the US dollar on Wednesday due to heavy forex outflows amid strengthening US treasury yields.

A negative trend in domestic equities and a stronger dollar in overseas markets also sapped investor appetite, forex traders said.

At the interbank foreign exchange, the rupee opened at 81.90 and later fell to 82.02 to a dollar in day trade due to risk-averse sentiment among investors. It finally settled at 81.93, its all-time closing low.

While Finance Ministry sources said they were not keen on intervening, investors are eying the RBI monetary policy meeting decision on Friday.