Sept 19: Finance Minister Yashwant Singh said today that the sharp fall in the value of rupee, which crashed to 46.36 a dollar, was not a cause of worry in view of the comfortable level of foreign exchange reserves."We are not worried about the fall in the rupee. We have enough foreign exchange reserves to take care," Sinha told reporters when asked about the rupee plunging to a historic low.Asked about the impact of shooting international oil prices which are hovering over $36 a barrel, Sinha said "increase in international crude prices also will not have much impact on India."The Institute of Economic Growth has also forecast a week rupee. "Given the increase in global interest rates, oil prices, import bill, the rupee will be under pressure and cross the 46 a dollar figure by end September 2000," IEG said in its latest monthly monitor of Indian economy.The rupee is expected to peak 46.36 to a dollar in September, come down to 46.07 in October and remain at 46.08 during November, according to the forecast."With inflation rate of 6-7 per cent, which is higher than the international rates, a similar adjustment (depreciation) is necessary in the exchange rate," it said.The report, however, said that the increase in domestic interest rates might, to some extent, help rupee to recover above the 46 mark. Referring to Reserve Bank of India's directive of converting half of export earner's foreign currency (EEFC) accounts by August 23, IEG said "the net dollar inflow was only $ 300 million. The RBI's move has not helped much to strengthen the rupee."The greenback gained against the rupee and other currencies due to flow of dollar into US following increase in interest rate in that country, it said.The rupee has so far lost about 56 paise against the dollar during last two days. The currency had closed at an all-time low of 45.03/05 on Monday - an intra-day fall of 20 paise - following heavy dollar demand from corporates and banks on account of imminent increase in domestic crude oil prices in line with international prices.Global crude oil prices have risen to $35.7 per barrel - the highest since the Gulf war in '90 - notwithstanding a commitment from the Organisation of Petroleum Exporting Countries at their recent meeting that it will increase production by three per cent to 26.2 million barrels a day instead of increasing prices in a big way.Dealers also pointed out that in recent times other currencies had also weakened against the dollar. The pound sterling moved from - :1.4015$ on September 11 to - :1.4056$ on Tuesday. During this comparative period, the rupee has displayed a relatively stronger trend against both the pound sterling and the euro - to 39.26 from 39.17 against the euro (September 11) and to 64.28 from 64.28.It was also pointed out that a dip in international gold prices by nearly $20 in recent past to around $271 per troy ounce as of now, is boosting demand for gold ahead of the domestic festive season. And this is seen putting pressure on the spot-rupee. A few senior bankers feel that there is now a strong case for imposing higher customs duty on gold.
