The rupee does not face any “serious challenge” of depreciation and will find its own level after initial bouts of volatility, Finance Minister Arun Jaitley said on Thursday.
“I think India’s currency is finding its own level. I don’t see a very serious challenge,” he said at an event jointly organised by Ananta Centre and CII.
Rupee is impacted by global events but eventually recovers, he said. “Of course if some significant movements in currencies globally take place — like US rates, there is some movement. But I think eventually after an initial impact our currency has shown, at least twice in last 3 years, a tendency to recover.”
Jaitley said that despite global currencies losing ground, the rupee was holding out for the past one and a half year, till August last year, when China devalued its currency.
“I think till that moment we have almost kept pace and parity with the US dollar. The dollar had strengthened. Subsequent to that we lost significant amount and then recovered a little bit. Over other currencies in the world, we were still strong,” he said.
Analysts are predicting more losses for India’s rupee, Asia’s worst performer this year, as the dollar strengthens and attempts are made to arrest a slump in exports.
Rupee, which closed at 66.66 to a dollar yesterday, has fallen 0.6 per cent in 2016 after rallying 2.8 per cent in March. It had in February fallen to the brink of an all-time low of 68.845 to a US dollar seen in August 2013.
Barclays forecast that the rupee may drop to an unprecedented 69 a dollar by June 30. It will further weaken to 70.50 by September 30 and end the year at 71.50 a dollar.
Morgan Stanley has forecast it to be 73 to a dollar by the end of 2016.