New Delhi: The government is bracing itself to bring in a slew of new measures to check the fall of the Rupee against the dollar. Not only is the Foreign Direct Investment limit in some sectors going to be increased, but the Reserve Bank of India, SEBI and other regulators are also planning steps to facilitate overseas investment in the country. The rupee on Tuesday fell to a record low level with the cost of one dollar falling to Rs 58.96.

The pace at which the rupee has slid against the dollar in the last few days is more than any currency of the emerging economies including Russia and Brazil. The Finance Ministry has been holding meetings in this regard regularly.  Economic Affairs Secretary Arvind Mayaram has the key to solving this problem. It is because of these ministry meetings that the government has agreed to increase the FDI limit in a number of sectors. Mayaram again reiterated that this trend of falling rupee was only temporary and it will correct soon.

The Chief Economic Advisor of the Finance Ministry, Raghuram Rajan has also stated that the government is trying to increase the FDI in the country to come out of the crisis. The Government is mulling increasing portfolio investment as well as FDI in the country. The government can make some announcements regarding this in the coming week and if need be, the government might exercise the option of floating NRI bonds.

Regulators keep a close eye

According to Raghuram Rajan, SEBI, RBI and Finance Ministry is keeping a close eye on the currency market. The regulators will take action at their own levels whenever they are required. It was only when the State Bank of India entered the currency market after the rupee reached the level of nearly 59 that the rupee showed some recovery. It is being said that the State Bank sold dollars in the market after the RBI’s directions. The rupee had crossed the 57- mark on Tuesday itself. The drastic fall of the rupee in just one day has left the government flabbergasted.

Outflow of Dollar

The outflow of the dollar from the Indian debt market by the foreign investors has put the Indian currency under pressure. Rajan accepted that because of the outflow of the dollar from the debt market and trade deficit, the Current Account Deficit (CAD) has taken a hit and this has further dented the value of the rupee against the dollar. He said that it is a matter of concern but there is no need to be unduly worried about it. The situation will change quickly. India Forex Advisors CEO, Abhishek Goenka has said that the deficit in the CAD and the statement of the RBI on inflation has led to further commotion in the market.

The FIIs have withdrawn USD 48.60 crore from the debt market since May 1, 2013. The increase in trade deficit in the month of May has also made the rupee weak. The value of the rupee has depreciated by 5.5 percent from the January 1, 2013 this year. It has slid 2.5 percent in the last two trading sessions.  


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