India will address the rupee's volatility against the dollar, a government official
An official from the government claimed on Monday that India is making an effort to "address volatility" in the rupee, which has recently dropped to record lows against the dollar due to concerns over a widening trade deficit and the selling of assets by foreign investors.
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A government official said on Monday that India is attempting to "address volatility" in the Indian rupee, which has fallen to record lows against the dollar in recent weeks amid worries about a growing trade deficit and the selling of assets by foreign investors.
Due to widespread dollar strength and investors' flight from the domestic stock markets, the rupee has lost 6 percent of its value against the dollar this year.
In contrast, rising commodity prices caused India's trade deficit to reach a monthly record high of $24.3 billion in May.
"There is no doubt that the CAD (current account deficit) will increase while oil prices are this high. India has been bridging CAD with capital flows during the past few years. There are obstacles to capital flows this year "The official, who wished to remain unnamed, told journalists.
The partially convertible rupee was trading at 78.95/96 per dollar as of 1013 GMT, not far from the fresh record low it reached on Friday.
However, the official claimed that India's macroeconomic fundamentals were still sound and that he was "pretty sure" that India would fare well if things got better.
The source added that the government would maintain its budget deficit goal of 6.4 percent of GDP for the fiscal year 2022–2023, which began on April 1.
