India would not be concerned if the rupee currency fell to 80 against the dollar after hitting an all-time low of 70.1 on Tuesday, as long as other currencies also depreciated, a senior finance ministry official said.
Meanwhile, the BSE Sensex trimmed early losses to trade flat in late morning deals backed by gains on pharma, banking, auto and IT counters, even as the rupee fell to a fresh all-time low against the dollar triggered by economic crisis in Turkey.
The rupee has been one of the worst performers among currencies of emerging market economies.
The rupee, which has fallen more than 8 percent this year, has pushed up prices of imported items such as petroleum products, commodities, electronics and engineering equipment, creating a headache for Prime Minister Narendra Modi ahead of a general election due early next year. Trade deficit soared to a almost five-year high of $18 billion, data released by the commerce ministry on Tuesday showed. Reportedly, the sharp downturn in rupee was a result of foreign investors selling over $6.8 million in the equity market and $5.15 billion in the debt market.
The fall came majorly due to a drop in Turkish Lira, which helped the United States dollar to gained strength on the back of fears that economic crisis in Turkey could spread to other global economies. The forex market is closed on Wednesday on account of Independence Day. Opposition politicians blamed the government's economic policies. In simple terms, it means that imports will become expensive. Currently, India imports around 80 per cent of its crude requirement.
In the current financial year, which began on April 1, the rupee has depreciated by around 6.7 per cent against the U.S. dollar.
In layman language because of deteriorating rupee, petrol prices will shoot even higher leading to an increase in daily transportation costs. On the other hand, a falling rupee is a good news for exporters in theory but the infrastructural challenges and bureaucratic hurdles make it hard for them to cash in.
The historical low in the value of INR has led to a new political blame game between Congress and BJP. He said the dip resulted from "external factors". Attributing the tanking rupee to external global financial crises the finance ministry is refusing to acknowledge the issue. "However, India's Macro fundamentals remain resilient and strong".
The government is closely monitoring developments relating to Turkey, which had generated global risk aversion towards emerging market currencies, and would address any situation arising in the context of the unsettled worldwide environment, minister Arun Jaitley said in a Facebook post on Wednesday.