Rupee on Thursday opened at record low 70.19 against the US dollar and further slipped to 70.26. It hit 70 to the dollar for the first time on Tuesday, falling 15 paise intraday due to sharp depreciation in Turkish lira. The rupee has fallen more than 9 percent year-to-date and around 2 percent in August.
Here is how the experts reacted to the fall in the currency:
“I think the Rupee has been strengthening in real terms for quite some time. The inflation rate has been modest but slightly above world inflation rates and as a result the rupee needs a modest weakening over time," said Rajan.
2. Ray Farris of Credit Suisse said the Reserve Bank of India is focusing on managing the volatility rather than the level."I wouldn’t expect RBI to try to hold any particular level but they will intervene persistently to try to keep volatility under control and manage the pace at which the currency moves,” said Farris.
3. Jahangir Aziz of JP Morgan said that the depreciation in the domestic currency was driven by the factors which are not in RBI's control and hence the central bank's intervention will not see much result.
“Intervention policies do work in a very short period of time in trying to slowdown the pace of depreciation but if depreciation is being driven by factors that are outside the control of RBI, you can intervene but you are not going to get very much out of that," he said.
4. Khoon Goh, head of Asia research of ANZ Research said one can expect rupee to test levels around 71.50-72 against the US dollar going forward.
First Published: IST