With Indian rupee scaling historic low level every passing day, Economic Affairs Secretary Arvind Mayaram has described the sharp fall in the value of the rupee as a reflection of “irrational sentiment” and maintained that there was no need to panic.
This assuaging statement came on a day when Indian currency depreciated to life-time low of 68.80/$ on account of month-end dollar demand and growing concerns over the effect the Food Security Bill, passed by the lower house of Parliament that will be impacting the current account deficit (CAD).
Mayaram also said that the CAD in 2013-14 will be much lower than expected. CAD, which is the difference between the inflow and outflow of foreign exchange, hit a record high of $88.2 billion in 2012-13. The government expects to bring it down to $70 billion in the current fiscal. However, fears are that the massive outlay of funds required for rolling out the Food Security programme is bound to raise the fiscal deficit by putting an additional burden of thousands of crore on the exchequer.
Further, Mayaram averred that government is not planning to ban derivatives trading in the currency market, a move that experts feel could help in curbing speculation.
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