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‘Not idle’ on rupee

Calcutta, May 20 (PTI): Finance minister Pranab Mukherjee today said the steep fall in the rupee was a matter of great concern and the Centre was trying to resolve the situation.

“It is a matter of great concern. We are watching the situation. The Centre is not (sitting) idle. We are trying to resolve (the issue),” Mukherjee said.

“This is because of the Eurozone crisis. There is also currency crisis in emerging markets, including Brazil,” he added.

At the forex market, the domestic currency has been falling against the dollar over the past few days.

In early trade on Friday, the rupee threatened to breach the 55-level as it slumped to 54.91 — a fresh all-time low — for the third straight session as copious fund outflows continued amid Eurozone worries.

Dealers said strong dollar demand from importers, mainly oil refiners, on expectation of further strengthening of the greenback, led to the fall in the domestic unit. However, the RBI had intervened to stem the rupee slide.

A Barclays Capital report has stated that the rupee is expected to drop further to 56 over the next one month because of the RBI’s “limited appetite” to support the currency and weak macro-fundamentals in the country.

“We expect the rupee to underperform the wider region (Asia, excluding Japan) as broad-based risk aversion related to the Eurozone exacerbates domestic concerns,” the report said.

 
 
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