India can't do much about rupee fall: Jim O'Neill

NEW DELHI: India will not be able to do much about the rupee's sharp fall, said Jim O'Neill, Former Chairman of Goldman Sachs AMC. "There is not much any country can do about the current situation," he told ET Now. "The only solution is to reduce the importance of the US financial system," he opined.

Asked about the effectiveness of the currency swap measures that the government is mulling, O'Neill said that while they would impact the day to day movements, playing around with them cannot influence the underlying trend.

O'Neill emphasised the need for India to control its rising Current Account Deficit (CAD). "India has unique challenges related to its CAD," he said. "Widening CAD, fiscal deficit & slow growth need to be addressed," he added.

According to him, bolder economic policies are required to recover from sluggish growth. "India needs to reduce its vulnerability," he said. "India's coalition politics hurting economic growth prospects," he added.

O'Neill did not rule out the possibility of more pain for Emerging markets and said that the underlying issue that is driving the markets is fears of US Fed tapering stimulus.

Meanwhile, the rupee slipped for third consecutive day in a row to hit a fresh record low of 68.75 intraday against the US dollar, as uncertainty over a possible US-led military strike against Syria knocked down Asian equity markets and currencies.

The currency has plunged a little over 13 per cent so far in the month of August alone to mark its worst monthly fall since the year 1993.

The Asian economies have already been under stress on speculation that US Federal Reserve will sooner than later start curbing stimulus leading to money flowing out of these economies.

"The whole of Asia and other emerging economies are in a tight spot. The Indonesian Rupiah, Phillipine peso, Malaysian Ringgit, Thai Bhat have been falling every day and are now at multi-year lows," ET Now reported.

The rupee recouped some of the losses on reports that the Reserve Bank of India (RBI) have intervened in the domestic currency when the rupee hit 68.75 against the US dollar, said a Reuters report.