India to tackle rupiah volatility against dollar – government official

An Indian rupee note is seen in this June 1, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo

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NEW DELHI, July 4 (Reuters) – India is trying to “cope with the volatility” of the Indian rupee which has fallen to record lows against the dollar in recent weeks, a government official said on Monday, as the ‘we feared a widening trade deficit and sales. assets by foreign investors.

The rupee has plunged 6% against the dollar this year, weighed down by the general strength of the greenback and the withdrawal of investors from domestic stock markets.

Meanwhile, India’s trade deficit hit a monthly record of $24.3 billion in May, hurt by rising commodity prices.

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“When oil prices are this high, it is obvious that the CAD (current account deficit) will increase. In recent years, India has filled the CAD with capital flows. This year, there are headwinds on capital flows,” said the official, who declined to be named. , told reporters.

As of 10:13 GMT, the partially convertible rupee was trading at 78.95/96 to the dollar, close to the new high set on Friday.

The official, however, said India’s macroeconomic fundamentals remained strong and he was “quite confident” that India would come out “well” when the situation improves.

The official also said the government would stick to the budget deficit target of 6.4% of GDP for the 2022/23 financial year which started on April 1.

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Reporting by Manoj Kumar; Editing by Toby Chopra and Alison Williams

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