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If oil prices do not rise, chances of rupee stabilisation is more: Subash Chandra Garg

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Expecting a stabilisation in the value of rupee, Economic Affairs secretary Subash Chandra Garg said that if the oil prices do not raise, chances of rupee stabilisation at 68 69 level is more.

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During the first three months, there had been outflow of capital and in the last year the total outflow was $20 billion, he added.

“If oil prices do not rise further, the chances of the rupee stabilising at 68 69 level is more,” Garg said.

When asked how the rupee will be affected if China devalued its currency, he said that for the first time in the last 20 years, the Chinese economy had experienced current account deficit (CAD).

“Now China’s exports and imports are altering fundamentally. So far, the depreciation of the Chinese yuan was not so high. Even if the Chinese currency is devalued, India will not be affected as long as the depreciation of all currencies vis-a-vis the dollar was similar,” he added.

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There would be no problem as terms of trade would not change, Garg said. “However, we are watching closely to what extent China devalues its currency,” he said.

Owing to high oil prices, India’s CAD had risen to 1.9 percent for which the rupee was depreciating. This called for a need for higher capital inflows, he added.

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