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As the rupee was hammered on Tuesday before recovering in late trading, Finance Minister P Chidambaram closeted with key government advisers and secretaries. Prime Minister's Economic Advisory Council Chairman C Rangarajan, Planning Commission Deputy Chairman Montek Singh Ahluwalia, Economic Affairs Secretary Arvind Mayaram and Commerce Secretary S R Rao exchanged ideas with the finance minister.
Chidambaram is learnt to have discussed the current economic situation. The country's strategy for the upcoming G-20 Leaders' Summit at St Petersburg, Russia, next month also came up for the discussion.
The finance minister met top officials for the second day in succession and the meeting assumes importance since further measures to boost capital inflows may be taken if need be.
Key Planning Commission officials said the rupee would depreciate further a bit, before recovering. The measures taken by the government will start yielding results after a fortnight. Foreign institutional investors (FIIs) will evaluate global situation and will return to India, they exuded confidence.
Finance ministry officials said the rupee will have to find its "sensible level", without indicating what that level could be.
The rupee breached the 64-mark against a dollar intra-day by falling 98 paise to trade at record low of 64.11 on the back of strong dollar demand before recovering to close at 63.23, a fall of 12 paise against Monday's closing.
Meanwhile, the finance minister said in the Lok Sabha the government had taken a number of steps to stem the depreciation of the rupee, including moderation in demand of non-essential imports and enhancing supply of capital flows.
"A number of steps have been taken to moderate demand of non-essential imports on April 12, 2013, enhance capital flows to augment supply of foreign exchange and curb speculation in the foreign exchange market to stem the rupee depreciation," Chidambaram said in a written reply to the Lok Sabha.
He said the fall in the value of the rupee in the recent period was due to supply-demand imbalance in the domestic foreign exchange market on account of elevated levels of the current account deficit (CAD) and volatility in capital flows, particularly foreign institutional investor inflows.
'Sensible level'
Finance ministry officials said the rupee, which plunged below the 64-mark against the dollar intra-day on demand for dollar, would have to find its "sensible level", without indicating what that level could be.
Meanwhile, Moody's Investors Service analyst (sovereign risk group) Atsi Sheth said: "We believe the currency will remain under pressure until the CAD narrows meaningfully, or capital inflows accelerate due to an improving growth outlook."
She said the depreciating rupee, fiscal and current account deficits and weaker growth were already factored in the current lowest investment grade rating to India. "While the current rupee depreciation may be a new development, the factors that underpin it are not, and have been incorporated into the Baa3 rating," Sheth said in a note on Tuesday.
