In the wake of the Indian rupee touching the 60-mark on Thursday, the Reserve Bank of India has said it is monitoring the movement and that steps are being taken to contain the situation given the steep fall in the currency.

H.R. Khan, Deputy Governor of RBI, said: “We are watching and monitoring the situation. All short-term and long-term measures are being taken,” he said here today on the sidelines of a National Payments Corporation of India (NPCI) event.

The Deputy Governor also said that the central bank is in talks with the Finance Ministry as far as the rupee is concerned.

The domestic unit touched a historic intra-day low of 60 against the dollar after the US Federal Reserve Chairman indicated slowing of its monetary stimulus via bond-buying programme.

On Friday, the rupee recovered its losses to trade at 59.27 per dollar in the evening trade.

The Fed chief had said on Wednesday that it would begin slowing the pace of its $85-billion monthly purchases of US Treasuries and mortgage-backed securities later this year as the US economy is recovering in line with forecasts, with the goal of ending it in mid-2014.

This triggered a fear of capital outflows from global markets especially among emerging economies thereby impacting the rupee.

According to Kuntal Sur – Director, KPMG, “The rupee has been under pressure since last month and has lost around 10 per cent during this period on the back of heavy foreign currency outflows as foreign investors withdrew heavily from debt market and also from equity market.

“The ballooning current account deficit (CAD) and cloudy outlook of reforms have added to the local currency’s woes. Outlook of the currency is expected to remain weak till the structural measures are taken to improve CAD and the sentiments of foreign investors,” Sur said.

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