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The Indian rupee is currently overvalued by 5-7%, a government adviser said Tuesday, saying that New Delhi would probably not support the market despite the fall of nearly 7% of the dollar this year . [19659002] The rupee fell to a record low of 69.0950 for a dollar on Thursday and closed at 68.57 on Tuesday. "The inflation rate in India has been much higher than the overall rate and that is what determines the real effective exchange rate," said Rajiv Kumar, vice president of NITI Aayog. told reporters in New Delhi. "And the real effective exchange rate today at 69 or 68.97 is still overvalued by 5 to 7%."
"No need to intervene"
M. Kumar, a board member of the Reserve Bank of India, said that the intervention was not necessary. "There is no doubt that we are worried, that we get nervous or that we intervene in the market," Kumar added, adding that economic growth India is expected to grow from 7.7% in March to more than 8% next year.
He said that India did not aim to protect the rupee at a particular level and that any intervention by RBI was aimed at containing only volatility.
UBS Securities said in a note that the rupee should remain in the range of 68-72 against the dollar in the near term, on rising external risks, but added that the RBI would intervene to control volatility. "If external stress continues to climb and / or the USD strengthens, we think policymakers could consider raising USD deposits as a last resort to stabilize the rupee," adds UBS Securities
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