Taking a dig at the Bharatiya Janata Party (BJP) government for rupee's continuous fall against the US dollar, former finance minister P Chidambaram said he was looking forward to saffron party’s good days when a dollar would be equal to Rs 40. Chidambaram's sarcastic remark was in connection with rupee touching historic low of 68.89 against dollar on Thursday (June 28).
“Looking forward to BJP's achhe din when the US dollar will trade at One dollar = Rs 40!” Chidamabarm tweeted on Friday. Giving a quick response, Finance Minister Piyush Goyal said, “Knee-jerk reactions (on rupee fall) are not called for”.
At the interbank foreign exchange market, the rupee opened at 68.87 a dollar against 68.61 previously and sank to 69.10 in morning deals, falling 49 paise.
Global oil prices have climbed after the US asked its allies to end all imports of Iranian oil by November. Concerns over supply disruptions in Libya and Canada also pushed prices higher. Higher crude oil prices and a declining rupee are a double whammy for India, forex dealers said.
According to media reports, traders were hopeful the Reserve Bank of India (RBI) would step in to prevent further losses in the currency.
The Reserve Bank of India's battle to contain a falling rupee just got tougher. The current account deficit is widening and a weak global investment climate coupled with policy paralysis in New Delhi, sticky inflation and slowing growth have increased the aversion of foreign investors to India, pushing the capital account into the red.
Last week's move by rating agency Standard & Poor's to cut the country's credit rating outlook to "negative" has complicated matters further for the RBI, which has few options other than intervention and tinkering with rules on export credit to encourage inflows, RBI officials say.
(With inputs from agencies)