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The Finance Ministry today said that it will take steps to increase the foreign investment flows into the country to strengthen the rupee and the regulators will act at appropriate time to contain the fall in domestic currency that touched a record low of 58.96 to a dollar.
“We will continue to implement measures to ensure that portfolio investor inflows are enabled and encouraged and some of these measures will be announced very shortly.
“In the coming weeks, we will recommend to the Cabinet policies to enhance FDI limits on a number of areas. All this will help not just in short-term objective of financing the CAD safely but also in the longer term objective of ensuring sustainable growth,” Chief Economic Advisor Raghuram Rajan told reporters here.
The exchange rate has depreciated by 5.5 per cent since January 1 and over 2.5 per cent in the last two trading session. The rupee is currently trading at 58.54 to a dollar.
“There has been some volatility in the financial markets in the last few days. The Government, RBI and SEBI are watching the market development and each one will take action as warranted,” Rajan said.
He said the rupee depreciation is mainly on account of outflow of FII funds from debt instruments and high trade deficit.
On May 1, outflows from debt instruments stood at $486 million, while equity inflows stood at $4.16 billion. So since May 1, the portfolio inflows into India have been $3.7 billion.
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