Weak fundamentals driving rupee down, says RBI deputy governor KC Chakrabarty

MUMBAI: Reserve Bank deputy governor KC Chakrabarty today opined that the rupee is under pressure due to the large fiscal deficit and other weakening macroeconomic fundamentals.

"If the country has high fiscal deficit and high inflation, and also has high current account deficit, I don't see why the currency will not depreciate," said Chakrabarty told reporters on the sidelines of an event hosted by the Central Bank of India and the SME Chamber here.

The rupee has been the worst performer in the Asian region having lost over 18 percent this calender year. The fall was escalated since the US downgrade by S&P early August and touched an all time low of 54.30 to dollar last Thursday.

Today, it closed at 53.05 to a greenback. Though RBI had discretely intervened in the market since mid last month, selling nearly 6 billion dollars to arrest the rupee fall, besides initiating measures like freeing up the foreign currency deposit rates and capping open positions by dealers, they failed to make the desired effect.