Fundamentals 'very strong', Finance Ministry assures investors

NEW DELHI: The Finance Ministry today sought to assure the investors that the country's fundamentals are "very strong" even as the rupee slipped to below 63 to a US dollar and the BSE Sensex plunged by over 426 points on global cues, following currency crisis in Argentina.

"Current Account Deficit (CAD) is below $50 billion. Foreign exchange reserves are (at) all-time high. We have very strong fundamentals... I don't think that there is any cause of worry," Economic Affairs Secretary Arvind Mayaram told reporters here.

He was responding to a query regarding the sudden decline in the value of the Indian rupee. The domestic currency slipped to nine-week low of Rs 63.1 to a dollar, while the BSE Sensex plummeted by over 2 per cent or 426.11 points to close at 20,707.45.

Referring to impact of peso crisis in Argentina on the Indian markets, Mayaram said: "There is no reason why we should believe that if Argentina is in trouble today then Indian rupee should follow. I do not think that correlation exists at all."

The steep decline in Argentina's currency peso on Friday triggered a massive fall in stock markets around the world including in India.

On the rupee, Mayaram said: "You would see rupee will remain range bound. There will be some ups and downs but that is normal in markets. And therefore I think we should not be overtly concerned with marginal movements of rupee."

The currencies world over behave in a different manner depending on their own fundamentals, he said, adding that India has seen considerable improvement in its CAD situation.