Even as the rupee plunged to a 10-week low against U.S. dollar on Friday erasing almost the entire gains it made since the recent reform waves, the Finance Ministry on Saturday expressed optimism of a recovery before the fiscal-end and ruled out any intervention by RBI.
“We are quite hopeful that the rupee will strengthen in next two-three months,” Economic Affairs Secretary Arvind Mayaram told reporters at the concluding day of the two-day Asia Securities Forum in Mumbai.
Mr. Mayaram hoped the currency will appreciate once the economy is back on an upward curve without any effective intervention by the RBI.
“I don’t think RBI would have to effectively intervene for strengthening the rupee. We believe, once the slowdown bottoms out, the rupee will strengthen“.
The rupee lost nearly 4 per cent against the dollar in November alone, becoming the worst loser among the leading global currencies for the month. Last year, the Indian unit was the second worst performer after the ‘real’ of Brazil, losing close to 20 per cent.
On the back of reform initiatives on September 14 and October 5, the rupee had rallied 5.1 per cent to close at 51.37 to the dollar. Since April, the rupee has fallen by more than 6 per cent, and it closed at 55.5350/5450 a dollar, a 10-week low.
In 2010-11, the currency appreciated by 1.1 per cent, but slid by more than 12 per cent in 2011-12 in the wake of the European crisis.
Rejecting reports of Government slipping on the fiscal deficit target of 5.3 per cent for FY13, Mr. Mayaram exuded confidence of meeting the target on the back of successful beginning of the Rs 30,000-core divestment programme yesterday wherein the Government mopped up Rs 808 crore from a 5.6 per cent stake sale in Hindustan Copper.
“Let me reiterate, the Government is fully committed to meet its fiscal deficit target of 5.3 per cent. You have seen the results of first disinvestment. We are also looking at measures to constrain expenditure“.
On the almost dried up primary market, he said after the success of Hindustan Copper share sale, the IPO market “should revive.”