"India's ability towards reforms would set the direction for the rupee in future," a senior Finance Ministry official said.
The rupee on Thursday dropped to 20-month low to 64.23 per dollar. It, however, recovered in Friday's trade to end at Rs 63.94 to a dollar on fresh selling of dollars by banks and exporters.
The fall in the rupee, according to the official, has been mainly on account of increased flow of international capital to countries like Malaysia and China. This is impacting inflows to India, he added.
It was pointed out that the initiatives taken by the NDA government to attract foreign investments by easing the FDI norms in sectors like insurance and defence would help in improving the value of domestic currency.
Moreover, the 'Make in India' campaign and the government's determination to promote ease of doing business too would help in attracting investments.
Much however, the official said, would depend on the fresh round of reforms which the government is trying to push through legislative measures. The key reform bills pending before Parliament include Goods and Services Tax (GST) and Land Acquisition.

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