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The Finance Ministry has said that with no apprehension of further deterioration in the external situation, the rupee will bounce back from current levels.
The rupee slipped below the 55-level mark against the dollar on Thursday, but recovered to close at Rs 54.94, 42 paise stronger than on Wednesday.
This, along with other positives, will be at the core of the Government's pitch during its road-shows on ‘India: The Incredible Investment Destination.'
These road-shows are aimed at qualified foreign investor (QFIs) in the Gulf, and will take place between June 10 and 15.
The Economic Affairs Secretary, Mr R. Gopalan, said: “I feel the external situation may not deteriorate, and with the kind of steps we take, we are seeing that the rupee will not remain at this level and market forces will bring it back.”
The rupee has depreciated by over 20 per cent since January and had touched an all-time of Rs 56.50 against the dollar.
Better growth prospects
He added that the growth prospects of the economy are improving on the back of falling crude oil prices and gold imports. These two factors will help bring down current account deficit (CAD) and the fiscal deficit. Besides, the savings rate in the January-March quarter has shown improvement, he noted.
The Government expects the economy to grow at 7.6 per cent in the current fiscal. “The Government has to address the deficit issues if it wants growth to take place. So the fiscal deficit has to be kept at 5.1 per cent this fiscal,” he added.
Interest rate
He is pining hopes on an interest rate reduction to boost growth. The RBI would take into account the inflationary situation and external factors while deciding on the interest rate stance in its policy review on June 18.
He also claimed that net foreign institutional investor (FII) investment in May was the second highest in a decade. The country got a net of (both equity and debt) $597 million in May this year against (-) $947 million in May 2011 and (-) $1,505 million in May 2010.
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