SEARCH

Business » Economy

Updated: May 29, 2012 22:24 IST

Pranab hints at steps to quell rupee volatility

Special Correspondent
Comment (6)   ·   print   ·   T  T  
Pranab Mukherjee
Pranab Mukherjee

Even as the rupee has been slipping to new lows against the dollar in recent weeks owing to a combination of negatives factors at home and abroad, Finance Minister Pranab Mukherjee, on Tuesday, said the government was taking a series of steps to contain the volatility in the foreign exchange market and the Reserve Bank of India would step in to intervene as and when necessary.

“The government is taking a series of steps. However, managing [the] rupee is market-related ...There is a lot of volatility. As and when the RBI will consider necessary, it will intervene. It depends on the market forces and market forces are uncertain,” Mr. Mukherjee told the media here.

The Finance Minister was responding to all-round concern over the rupee breaching the psychological 55-mark against the greenback following a sustained pull-out by foreign institutional investors (FIIs) from emerging markets, including India, as part of their global risk aversion strategy and seeking safer havens in the U.S.

Aggravating the situation for India further has been a widening trade and current account deficit (CAD), a high fiscal deficit coupled with rising inflation and concerns over tax on foreign investors. Not without reason, therefore, that the rupee slumped to a new low of 55.47 during the day's trade and closed marginally higher at 55.39 against the dollar.

Such has been the demand for the U.S. currency from importers, especially oil refiners, that the Indian rupee has turned out to be one of the worst performers among other Asian currencies, touching fresh lows in the last couple of weeks. And this has been despite interventions by the RBI to contain the extreme volatility in the forex market.

In a written reply to the Rajya Sabha on the causes for the free fall of the rupee and its impact on the economy, Mr. Mukherjee sought to pin the blame on the global slowdown owing to the eurozone crisis and assured the House that steps were being taken to tackle the situation.

“Global slowdown due to unfolding of eurozone sovereign debt crisis has, inter-alia, impacted the Indian economy,” he said.

RELATED NEWS

GDP growth slumps to 9-year lowMay 31, 2012

More In: Economy | Business

When government gives anything for free, people never raised their voices against it. Where does these money come from and value does it add value to life of people has never been answered. Now when any scam pops up the politicians say that those or not meant to make money for government!!! If nothing comes in from government spending and tax payers money is given free to poor and little to improve the infrastructure then how are we going to build asset for this country? The day when Indians revolt against these free giving and make themselves accountable we will see a change. We want to improve the means to earn money but not improve earning itself from government we will see progress.

from:  marudah
Posted on: Jun 2, 2012 at 19:58 IST

The crisis has blown up to this extent because we aare not able to brinfg in Reforms
under some pretext or other and blame some outside causes..

from:  T.SS.Sundareswaran
Posted on: Jun 1, 2012 at 23:02 IST

Do our politicians & leaders believe that we live under the rock,or do
they want to keep us in perpetual ignorance? This is typical Indian
behavior - we believe that the erosion in the value of rupee is
because of the eurozone problems, that the RBI "will take steps" to
face the situation, that inflation is under control... the lies go on
and on.

Honesty and transparency do not exist in the rank and file of our
political leadership - which tells lie after lie to comfort the common
man. The crisis in our economy is because of bad policies, be it
subsidies, the large fiscal deficit, the large loopholes in the tax
code & the huge amount of black money in India & abroad.

The government does have solutions, but can not implement them - for
it is made up of corrupt, weak & unqualified & unpatriotic people, who
couldn't care less about the common man. This is the sad, undeniable
truth.

from:  Sai Bhalabhadra
Posted on: May 31, 2012 at 15:00 IST

Big Joke. The fall of rupee is primarily due to reckless government debt by creating programs such as NREGA, food security, sixth pay commission, etc. None of these programs can be supported by revenue coming from Tax. One cant expect rupee to hold value when the government is the main culprit destroying it by taking reckless debt..Period.

Pranab has no guts to stop these FREEBIES programmes..

from:  bingul
Posted on: May 31, 2012 at 09:15 IST

Why do we need a Finance Minister if everything is left to market forces to decide?

from:  ravi
Posted on: May 30, 2012 at 22:30 IST

It is surprising that we regularly get in and out of trouble but keep talking big things that we neither seem to understand or be able to control because the market is dictated by a number of events. Most of these events are not predictable and most importantly not controllable. Hence all the tall talk that the ministry and the reserve bank says and does seems to have no effect on the market and it behaves as if it has a mind of its own. Earlier they said if America sneezes, India catches a cold but today even if Maldives sneezes India seems to be catching a cold, not to mention calamities natural and manmade anywhere in the world. Then how on earth do we think that we are going to progress? Even God will weep if we ask him this question.

from:  Srinivasan R
Posted on: May 30, 2012 at 10:01 IST
Show all comments
This article is closed for comments.
Please Email the Editor

Economic Survey

More Economic Survey »

O
P
E
N

close

Recent Article in Economy

RBI unbiased about the way to go on rates: Raghuram Rajan

The Reserve Bank (RBI) is without bias either way about raising or cutting interest rates, while further policy will be contingent on re... »