New Delhi (Sputnik): As the Indian rupee continues to slide downwards, hitting a record low of 72.69 a dollar on Monday, the Indian government and the country's central bank have initiated measures to bolster the currency. The Reserve Bank of India (RBI) is cautious and concerned over the fall of the rupee, as it may widen the current account deficit owing to bigger oil import bill, a finance ministry official said on Monday.
"Oil prices combined with rupee fall is disturbing the current account deficit. The government, RBI will not shy from taking measures on depreciating rupee," the finance ministry official said.
India's current account gap widened in the April — June quarter to $15.8 billion, or 2.4 percent of gross domestic product (GDP), more than January-March's 1.9 percent of GDP, mostly hurt by higher payments for oil, data released on Friday shows.
Another government official said that at the beginning of the financial year, the government estimated the crude import bill at around $108 billion at an exchange rate of INR 65 per dollar, but with the rising crude price combined with a falling rupee, the oil import bill may surpass $115 billion.
The rupee has fallen more than 13 percent this year, making it the worst performing Asian currency.
The Indian government has expressed the view that the US government's approach to making the dollar stronger has been stimulating the Indian currency's fall. Foreign investors have been pulling out of emerging markets, betting on a stronger US economy. On Sunday, US President Donald Trump announced that the American economy's growth rate was higher than the unemployment rate for the first time in over 100 years. Analysts have pointed to the possibility of the Indian rupee sliding lower.
The GDP Rate (4.2%) is higher than the Unemployment Rate (3.9%) for the first time in over 100 years!— Donald J. Trump (@realDonaldTrump) September 10, 2018
Meanwhile, the Indian government is now considering a Non-Resident Indian (NRI) bonds or deposit scheme for overseas borrowing, which may also provide some relief to offset the current account deficit.
The falling rupee exemplifies India's laid-back approach to all issues. Finance minister's "no need for knee-jerk reaction" comment has accelerated the rupee's slide, raising India's FX debt and import bill by billions. India is not an export-driven but import-dependent economy.— Brahma Chellaney (@Chellaney) September 10, 2018