'Irrational sentiment' impacting rupee: Arvind Mayaram

Attributing the slide in rupee to two-month low of 63.24 against the US dollar to "irrational sentiment", a senior Finance Ministry official today said the domestic currency will stabilise soon and revert to
range-bound level.

"Rupee, to my mind, is going to stabilise. It is going to go back to the range-bound level (at) which it was last week... and this very irrational sentiment will play itself out very soon," Economic Affairs Secretary Arvind Mayaram told reporters here.

The rupee today slipped to nearly two-month low level closing of 63.24, down 77 paise or 1.23 per cent, against the dollar.

The local currency started weakening since last week after the dollar purchase by oil companies was partly shifted to the market.

PSU oil companies are the biggest buyers of dollars, requiring $8-8.5 billion every month for import of an average 7.5 million tonnes of crude oil.

In August, the Reserve Bank had opened a special window to help the three state-owned oil marketing companies -- IOC, HPCL and BPCL -- to meet daily foreign exchange requirements and buy dollars directly from RBI.

The rupee has recovered over 8 per cent since August 28, when it fell to a record low of 68.85 to the dollar. The gain in rupee had followed optimism that the US Federal Reserve would delay the tapering of its bond buying programme.

Mr Mayaram said several other currencies in the Asian market have weakened in the last two-three days "because of irrational sentiments, which I believe grips the market... because of the strong numbers which came out from the US".

The US economy saw an addition of 2,04,000 new jobs in October despite a fortnight long government shutdown. The latest data had also reflected improvement in the condition of
the world's largest economy.

Mr Mayaram echoed the sentiments of Finance Minister P Chidambaram who earlier expressed the hope that "rupee will settle down".

The Economic Affairs Secretary also stressed that the current account deficit (CAD), which has been fuelling speculation in the currency market, will come down in the current fiscal to $60 billion.

CAD, the difference between the inflow and outflow of foreign exchange, had touched an all-time high of $88.2 billion, or 4.8 per cent of GDP, in the last fiscal.