When will rupee bounce back? Even RBI has no answer

Attributing the decline in rupee to global factors, Reserve Bank Governor D Subbarao said on Thursday it would be difficult to estimate when the situation will improve.

"The rupee depreciation over the last six weeks has been because of global factors . . . It is difficult to say how long that effect will persist because it is factors beyond our control," he told reporters in Indore.

The rupee has declined by about 9 per cent in the past three months and had touched an all time low of 61.21 to a dollar earlier this week.

It has, however, recovered to sub-60 level on Thursday following remarks of US Federal Reserve Chief Ben Bernanke that the stimulus programme would stay in place for some time.

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On the possibility of rate cut, Subbarao said he will assess growth, inflation and the external situation while taking a view on interest rates in the upcoming policy on July 30.

The CAD remains high, he said.

The CAD hit a record high of 4.8 per cent in the last fiscal.

In view of declining value of rupee, fears of inflation and high Current Account Deficit, the RBI left interest rates unchanged during last policy review in June.

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Earlier, during an outreach programme in Khurda village, Subbarao told the gathering that the central bank would accord priority to controlling inflation which still remains ‘high’.

RBI's efforts to contain inflation over the years have yielded fruit with the WPI inflation declining to 4.7 per cent, the lowest in over three years.

However, retail inflation stood at 9.31 per cent in May.

The apex bank would look at supporting growth but would make efforts to keep inflation low.