The Indian rupee on Thursday settled below the 70-mark for the first time ever against the US dollar. The loca l currency settled 27 paise down at 70.16.
The Indian currency has been under the pressure in the past few sessions due to big meltdown in the Turkish lira. Money market players say fears of a widening trade and current account deficit are also putting pressure on the rupee.
Currency experts believe that 70 to a dollar may not be the bottom and the rupee could weaken further in the coming days. The one key factor that is keeping market players on the tenterhooks is the volatility in the equity market as any FII outflow could only widen the current account deficit, ET had reported earlier.
As rupee continued to fall to new record lows, NITI Aayog Vice Chairman Rajiv Kumar said the Indian currency was overvalued and is moving towards its real value, and that it will not hurt the Indian economy.
"Let's be clear, the depreciation of the Indian Rupee against the USD is not indicative of a bad time for the Indian economy. Over the past three years, the rupee has been overvalued by approximately 17 per cent and the current depreciation of 9.8 per cent since January is a move towards its natural value," Kumar tweeted.
India Ratings has recently revised its currency outlook and now estimates the rupee to average 68.4 against dollar through FY19 (April-to-July average: 67.5 against dollar).
“Volatility in crude oil prices, portfolio inflows, normalisation of the monetary policy in the advanced economies and a likely $25 billion mobilisation from non-resident Indians will guide the level of rupee in relation to US dollar,” the rating agency said.
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