The rupee at the current level is "well corrected" and will gain further with stability returning to the foreign exchange market, Prime Minister's Economic Advisory Council Chairman C Rangarajan said on Friday, amidst volatility in the exchange value of the currency.
The rupee has recovered to trade at 63 levels after hitting its life-time low of 68.85 against dollar towards the end of August.
"The rupee at the current level is well corrected. Stability is returning to the foreign exchange market. As capital flows return and as current account deficit begins to fall, this tendency will strengthen," Mr Rangarajan said while releasing the Economic Outlook for 2013-14.
"Ultimately the value of rupee depends upon the level of the current account deficit, the level of capital flows and what is happening in the rest of the world. Therefore, it is a combination of the factors that ultimately that impact the value of rupee," he said.
The domestic currency has jumped 425 paise in five straight sessions starting September 7 on optimism sparked by steps announced by RBI Governor Raghuram Rajan, who took over on September 4, to rescue the battered financial markets.
When asked about the impact of likely tapering of quantitative easing in the US, if announced, by the Federal Reserve next week, he said, "I believe that foreign exchange markets have already digested it. All the impact we have seen is in terms of what the Fed will do."
Stating that there is no unique way for determining what the appropriate value of the rupee, he said many steps have been taken recently in order to stabilise the currenct and allay the fears of investors and restore confidence in the economy.