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As rupee sinks to historic low, Modi govt blames 'external factors'

14 August, 2018, 23:54 | Author: Lawrence Cooper
  • An India Rupee note. The currency has been hit by the Turkish lira's contagion. Reuters

Attributing the fall in rupee value against the United States dollar to "external factors", economic affairs secretary Subhash Chandra Garg said on Tuesday that there is nothing to worry about as long as the depreciation is in line with other currencies.

He said that even if the rupee falls to 80 per dollar, "it will not be a concern provided all other currencies depreciate in the same range". "The rupee is depreciating due to external factors which may ease as we go forward", Economic Affairs Secretary Subhash Chandra Garg told news agency ANI. The cause of this fall has been attributed to fears over a rise in global protectionist measures, along with a strong USA economy. There is "nothing at this stage to worry".

The currency crisis has been observed across Asian markets, causing a weakening in domestic equities, sparked majorly by the Lira crisis.

Mumbai: Rerversing all its early gains, the rupee on Tuesday collapsed to a life-time low of 70.09 against the U.S. dollar, falling 16 paise amid fears that Turkish economic crisis could lead to a global financial meltdown.

Tumbling rupee
Tumbling rupee

Sensex gained 207.10 points to close at 37,852 while NSE's Nifty closed at 11,435.10, up by 79.35 points.

The Indian currency, he said, is still better as compared to certain other currencies. However, soon afterwards, the Reserve Bank of India (RBI) is said to have intervened in the open market to curb the rupee's free fall.

Analysts said the falling rupee could lead to higher inflation as Indians pay more for imported goods and services.

"Given the uncertainty surrounding Turkey crisis and strength in the dollar index, importers are buying dollars aggressively".

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