Govt, RBI taking steps to stabilise rupee: Chidambaram
New Delhi: Attributing the decline in the rupee to a host of global and domestic factors, the government on Tuesday informed Parliament it has taken a slew of steps to check forex volatility and is monitoring the situation.
"The government is continuously monitoring the emerging external sector developments leading to higher CAD and rupee depreciation.
"(The government) has taken a slew of initiatives to boost exports and reduce imports, encourage capital flows to facilitate financing of CAD and stem the volatility in the exchange rate of the rupee," Finance Minister P Chidambaram told the Rajya Sabha in a written reply.
The rupee hit a record low of 61.80 to the dollar in afternoon trade today, while the S&P BSE Sensex declined more than 300 points. The currency has lost over 16 per cent since April.
Referring to the measures taken by the government to support the rupee, Chidambaram said they include "raising the rate of interest subvention from 2 to 3 per cent that will benefit exporters and small and medium enterprises, hike in import duty on gold, liberalisation of FDI, etc."
Regarding the current account deficit (CAD), the Minister said it has declined to 3.6 per cent in the January-March quarter from 6.5 per cent in the previous quarter of 2012-13.
For the full fiscal 2012-13, the CAD worked out to 4.8 per cent of GDP, or USD 88.2 billion.
In a separate reply, Minister of State for Finance Namo Narain Meena said the rupee depreciated significantly in the second half of 2011-12 owing to the impact of the Eurozone crisis on the Indian forex market.