FinMin says Re on stronger footing, assures stability in mkts

Asserting that the rupee is on a much stronger footing now, the Finance Ministry today said the government and RBI are vigilant and all steps will be taken to ensure stability in financial markets in the wake of the US Fed's decision to further trim its monetary stimulus.
"As long as it (the value of rupee) is range-bound, which is what we believe it will be, I do not think it should be a matter of concern. I don't think there should be a speculation on the rupee, which is backed by very strong macroeconomic fundamentals," Economic Affairs Secretary Arvind Mayaram told reporters.

The rupee in early trade was inching towards 63 to a dollar on fears of capital outflows in the wake of further tapering of bond purchase in the US, but the local currency later recovered to end the day at 62.56.
The BSE Sensex slipped over 225 points intra-day, but recouped some lost ground to close at 149 points lower.
"The rupee breaching 63 is not a matter of concern. If it breaches 63 and then pulls back then it is range-bound because these are normal market operations," Mayaram said.
Stating that the current account deficit (CAD) would be below USD 50 billion this fiscal and the country has foreign exchange reserves of USD 259 billion, he said "the rupee in that sense stands on much, much stronger footing. I don't think there is much reason to be concerned".

A Finance Ministry statement said the government and the Reserve Bank will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in financial markets.
The US Federal Reserve yesterday decided to cut its bond purchases further by another USD 10 billion. It has decided to purchase USD 65 billion per month of mortgage backed securities and longer-term treasury securities as against USD 75 billion per month earlier.
The Fed announcement in May that it would taper bond purchases had sent markets world-over into a turmoil. The rupee had fallen continuously and hit its life-time low of 68.85 in August last year.