The central government on Monday expressed concern about the decline of the rupee’s value for the first time and said that they are considering a special deposit scheme for non-resident Indians among other measures to curb further depreciation.
The rupee fell as much as 1.3 percent to a new record low of 72.66 against US dollar on Monday but regained a bit after the comments. The relief, however, may be temporary, the Bloomberg report noted.
A widened current account deficit and the rising crude oil prices—India’s biggest import—will continue to keep the government on edge and a strengthening dollar would further hamper its cause.
According to a data released by RBI on Friday, India's current account deficit (CAD) widened to $15.8 billion in April-June in value terms this year as against $15 billion in the same quarter of 2017-18, mainly due to a higher trade deficit.
The report noted that the finance ministry and the Reserve Bank of India are in touch and that there is a constant intervention of the central bank in the currency market as and when the need arises.
In 2013, the central bank had helped the derailed rupee on its course by luring inflows of about $34 billion through discounted foreign-currency swaps.
Finance Minister Arun Jaitley had last week attributed the fall in rupee to global factors and said that there was no need for panic or knee-jerk reactions.
The opposition parties led by Congress organised a nationwide strike on Monday to protest against the falling rupee, which has also caused the fuel prices to spiral.
A report by International credit rating agency Moody's Investors Service mentioned that sustained weakening of the rupee was "credit negative" for Indian companies that rely on US dollar debt to fund their operations but generate revenue in rupees.