NEW DELHI (Reuters) - 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.
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.
Subhash Chandra Garg, economic affairs secretary at the finance ministry, said the rupee was still performing better than some other currencies and the country had sufficient foreign exchange reserves.
“Even if the rupee falls to 80, it will not be a concern provided other currencies also depreciate,” Garg told reporters when asked about the currency’s impact on the Indian economy.
He said the rupee’s fall was mainly due to external factors and any further selling of dollars by the Reserve Bank of India (RBI) - it has already spent about $23 billion on intervention - may not help to further stabilise the rupee.
Analysts said the falling rupee could lead to higher inflation as Indians pay more for imported goods and services. Opposition politicians blamed the government’s economic policies.
“The Indian rupee just gave the Supreme Leader a vote of no confidence, crashing to a historic low,” Rahul Gandhi, president of the main opposition Congress party, said in a tweet referring to his rival Modi.
The rupee hit an all-time low of 70.1 per dollar earlier on Tuesday, as concerns about Turkey’s economic woes spreading to other emerging markets like India persisted.
Analysts said a rise in the 10-year benchmark bond yield to 7.82 percent on Tuesday reflected concerns about rising government borrowing costs in the market.
India plans to raise 6.06 trillion rupees ($86.71 billion) in the current fiscal year ending in March 2019, to fund the fiscal deficit.
($1 = 69.8900 Indian rupees)
Reporting by Manoj Kumar; Editing by Darren Schuettler
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