Shimla/Mumbai, May 24 (ANI): Commerce and Industry Minister Anand Sharma has blamed the historic depreciation in the value of the rupee vis-a-vis the U.S. dollar on international economic pressures such as the Eurozone crisis.
"There is pressure on the Indian rupee as well. We live in a world in which a problem in one part affects other countries as well. There is a crisis in the Eurozone. If you are exporting goods to a market that has crashed, or where there is less demand, or the economy of the other country has come down, and, if we still think that we will not be affected by it then it would be ignorance from our part," Sharma told media here.
Sharma further said the government is 'concerned' with the situation and is taking all steps to boost the value of the rupee.
"I do hope that the Reserve Bank of India (RBI) will intervene effectively to stabilise the volatility of the currency. At the same time, we will see what best we can do to keep our exports afloat. We have met with the targets, which we had set for ourselves for the last two years. India's two-way trade has crossed 788 billion U.S. dollars but the trade account deficit is a matter of concern primarily because of the high petroleum prices," he added.
Meanwhile, certain market analysts said that the Central Government needed to implement more confidence-boosting measures about its finances and stimulate investment to strengthen the value of rupee.
"It is not the case only with rupee but with various emerging economies. The reason being is that when there is a crisis they want to bring the money into safe haven, which at this point of time is only and only U.S. dollar. The second option was Japan, which recently got downgraded," said Market analyst and founder of Forex India private limited Abhishek Goenka.
"So, definitely, the money is going to the U.S. ten-year bonds. That is the reason we are seeing U.S. ten-year yield coming down every now and then. I think the problem is still likely to continue until and unless there is strong position taken by the central government about the FDI or the GST or something, which can continuously supply flow of dollars in the country," Goenka added.
Citing the main reasons behind the depreciation of the rupee, market analyst Samir Shah, said: "It has more to do with domestic reasons. Our current account deficit is widening further and further. The second thing is FIIs selling shares and taking dollars back home. Since 15 days, we have witnessed that there is a fall in crude oil price, the Brent crude has come down from 125 to 106 (dollars per barrel)."
" So, there is a clamour for oil marketing companies to buy dollars, to book dollars. So, the demand from the oil marketing companies to book dollars has gone up. The import of gold is having its own impact," he added.
The rupee hit another new low of 55.95 to the dollar in early trade on Wednesday. This is the sixth consecutive all-time low that the Rupee has hit in trade against the U.S. dollar.
The battered Indian currency, the worst performer among emerging markets since March, is poised for more weakness in the near term unless the authorities step in with specific measures, according to analysts and dealers.
Despite repeated interventions over the past sessions and a rash of other measures targeting deposits and exporters, the Reserve Bank of India has so far been unable to prevent the falls in the value of domestic currency. (ANI)