As the rupee breached 70 mark for the first time against the US dollar on Tuesday, the Centre said there was no need to worry at this stage as the fall was due to external factors.
“The fall in the rupee was due to external factors and there was no need to worry at this stage. The external factors were expected to ease,” Economic Affairs Secretary Subhash Chandra Garg told reporters here.
Read also: Free-falling rupee breaches 70 mark
The rupee dropped to an all-time low against the dollar as the Turkish crisis hit emerging markets. The Indian currency has been moving in the southward direction since the beginning of this year and has fallen around 9% as on date.
The Turkish crisis has only added to the rupee fall. Persistent high crude oil prices have raised the spectre of widening current account and fiscal deficits and also made Reserve Bank of India's job to keep inflation under check difficult.
However, experts have been insisting that the current fall in rupee is not a cause of worry as it is still overvalued in terms of Real Effective Exchange Rate (REER).
REER is used to measure the value of a specific currency in relation to an average group of major currencies, adjusted to the effects of inflation. It is normally trade-weighted, implying an increase in REER makes exports expensive and imports cheaper and hence a loss in trade competitiveness.
Recently Niti Aayog vice chairman Rajiv Kumar too had responded in the same manner to the criticism of the government on the issue of handling of the rupee.
India's first chief statistician Pronab Sen maintained that rupee breaching 70 to a dollar was not a bad level to be in at the moment.
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