Mayaram: Real value of Rs is near 60 to $

The official also said the sharp fall in the currency over the last few months was partly due to overseas speculators.

As the rupee closed at 62.60 a dollar on Monday,a senior finance ministry official said that the intrinsic value of the currency is between 58 and 60 against the dollar. The official also said the sharp fall in the currency over the last few months was partly due to overseas speculators.

The rupee has been highly volatile for the last few months,becoming the worst-performing currency in Asia. It touched an all-time high of 68.86 to a dollar last month.

There is something called intrinsic value of rupee. The intrinsic value of rupee comes from its purchasing power. The intrinsic value of rupee in Real Effective Exchange Rate (REER) term could be somewhere between 58-60,Arvind Mayaram,secretary,department of economic affairs said.

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REER is used to determine an individual countrys currency value relative to the other major currencies,including US dollar,Japanese yen,and euro,in the index,after adjusting for inflation.

Mayaram also said a fall in bulk diesel demand this fiscal year will save the government about $1 billion. Diesel accounts for over 40 per cent of fuel consumption in India,which imported crude worth $144 billion last fiscal year.

Regarding the impact of tapering of monetary stimulus by the US Federal Reserve,Mayaram said the government has enough ammunition in hand to deal with the situation.

I do believe when tapering happens then there will be outflow of capital but the fact also remains that we have enough ammunition… there is no room to be fearful of rupee taking a tanking, he said.

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India has forex reserves worth $270 billion and if the current trend continues there would be about $40 billion additional inflow of capital this fiscal,he added.

India most vulnerable to outflows: Moodys

NEW DELHI: India is among the countries that are most vulnerable to capital outflows as it relies heavily on external funding,global credit rating agency Moodys has cautioned.

India and Indonesia are the most vulnerable to capital outflows because of high reliance on external funding, Moodys Analytics said in its report How US Monetary Tightening Affects Asian Markets.

It said the impact of recent Fed announcements on bond yields have exposed structural flaws in Asian economies,particularly in India and Indonesia,and that the rupee was the worst performer in Asia. PTI