Kolkata: The Indian rupee, which has been depreciating against the dollar on account of external factors, will “stabilise” soon with the fundamental equation for trade unchanged, an official said here on Saturday.
“This breaching of 70 (mark) was on account of external factors largely on what happened in Turkey. Our fundamental equation for the trade has not been changed. Oil prices have not gone up.
“The demand-supply situation for dollars in the Indian economy has not got altered… our perception is that very soon it (rupee) will stabilise and it might go back to Rs 68-69,” Union Finance Ministry’s Department of Economic Affairs Secretary Subhas Chandra Garg said here.
On Thursday, the rupee had touched an all time low of 70.39-40 in the spot market and settled at a record closing low of 70.16 against the greenback.
Speaking on capital outflow, Garg said: “There was an outflow of $9 billion in terms of portfolio investments in the first three months of the current fiscal and last year, we had a inflow of $20 billion. But in July, there was no outflow. In August, there is positive inflow of about $1.5 billion.”
“It makes it clear that the episode arising out of Turkey essentially does not alter FPIs’ (Foreign Portfolio Investors) perception about the investability of India. I do not think that will change,” he said on the sidelines of a Merchants’ Chamber of Commerce and Industry’s event.
Garg also said that public sector banks, which are under Prompt Corrective Actions (PCA) imposed by the Reserve Bank of India, would do better going forward and there would be lesser requirement for provisioning of bad loans.
“Profitability of these banks will be coming back. They are expected to come out of PCA in the next 1-2 years,” he added.