With rupee plunging to lifetime low of 57.54 against dollar, the Finance Ministry on Monday said there is an unwarranted panic in the market and hoped it will settle down in some time.
“If you see weakening of all currency vis-à-vis dollar, rupee is also not unaffected in that sense. But I think this panic (in) the market, which is unwarranted,” Economic Affairs Secretary Arvind Mayaram told reporters in New Delhi.
This, he said, started off with misinterpretation of what Federal Reserve Chairman Ben Bernanke had said in terms of quantitative easing (QE) recently.
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“They have now more than clarified that this (QE) is not imminent, neither it is going to something, which will happen quickly. I think this will settle down in a while. We should not worry but we are watching the situation closely,” he said.
Chief economic adviser Raghuram Rajan said the weakness in rupee could be a temporary phenomenon.
“India has large Current Account Deficit (CAD), and currencies of emerging markets (with) large CAD have depreciated more. This could be temporary phenomenon. But again let me reiterate government is not supportive of weakening of rupee and we would like more stability,” he said.
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He, however, added that the government does not have specific level in mind where rupee should be at.
Last week Finance Minister P. Chidambaram, too, had said there was no cause for alarm and the currency would soon find its stable level.
Mr. Rajan further said the medium-term measures, which have been taken in past will continue and that will help rupee to find a level consistent with the sustainable growth.