Millennium Post

Govt to check rupee fall: Pranab

The government will take measures to check the fall in rupee, finance minister Pranab Mukherjee on Sunday said.

‘Yes, of course,’ Mukherjee said when asked if he was concerned about the rupee depreciation.

‘We will take some corrective steps,’ he said outside his residence here in south Kolkata prior to his departure for Delhi.

On his Saturday’s comment on measures to improve the depressed market condition, he said, ‘I have spoken to the RBI governor and finance secretary. Certain corrective measures should be taken and the RBI is looking into it.’

Mukherjee on Saturday said, ‘The steps we have taken... And we will be able to take certain measures to be announced on Monday which will improve market condition.’

Mukherjee had also expressed concern over inflationary pressures.

‘I would like to say GDP is at 6.5 per cent. There is inflationary pressure on economy, there is depreciation of rupee. These are, no doubt, signs of weakness in Indian economy ... I am concerned but I am not depressed’.

He had also noted that when the global economy is in turmoil, ‘then no country can expect that there will be pocket of development and particularly a large economy like India which is the third largest in terms of purchasing power parity cannot remain insulated from external factors’.

The rupee has lost over 25 per cent in value against the US dollar in the last one year. It weakened to over 57 to a dollar, exerting inflationary pressure on the economy.


The continuing depreciation of the rupee is expected to fuel inflation and push the headline number to 7.3 per cent for 2012-13, making a reduction in interest rates for borrowers unlikely in the near term, an economic think-tank has said.

The Centre for Monitoring Indian Economy [CMIE] has upped its fiscal-end inflation target to 7.3 percent from the 6.7 per cent and Reserve Bank's 6.5 percent, due to the slide in the rupee.

‘Driven by the rupee depreciation, headline inflation is expected to go up to 7.3 per cent in FY13 from our previous forecast of 6.7 per cent’ the CMIE said.

Such a scenario reduces the possibility of a cut in interest rates anytime soon and hence, we cannot have easing in interest rates before the second half of the fiscal, it said.

‘A CRR cut would be more effective [in transmission],’ the agency recommended to the RBI.

In its mid-quarter policy review last week, RBI sounded hawkish, going back to its inflation management role after giving signals of easing due to the sharp dent in growth in its earlier policy announcements.

The rupee has been one of the worst performing currencies at present, having lost nearly 30 per cent since last August.
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