NEW DELHI/MUMBAI: The prime minister sought to quell talk of a currency crisis yesterday, after the rupee plumbed record lows as it notched its biggest ever monthly fall, but there was no word of sweeping reforms needed to restore investor confidence.
Dollar selling by the Reserve Bank of India, rather than Prime Minister Manmohan Singh’s speech to parliament, helped pull the rupee out of a slide yesterday.
Singh said the currency’s fall was a matter of concern, but dismissed doomsayers’ predictions for the Indian economy, insisting its fundamentals remained sound and its banking system was well capitalised above international requirements.
“We need to ensure the fundamentals of the economy remain strong so that India continues to grow at a healthy rate for many years to come,” the octogenarian prime minister told lawmakers in his first significant speech to parliament on the economy in months.
“That we will ensure. We are no doubt faced with important challenges.”
Singh said the government would need to find ways to reduce imports of gold and oil products to reduce the trade gap, and he put a gloss on the rupee’s depreciation by saying it would help make exports more competitive and reduce imports.
By mid-afternoon, the RBI’s intervention had helped the rupee recover to 66.25 per dollar from an earlier low of 67.43, to stand a touch stronger than Thursday’s close of 66.55.
A discussion in the upper house of the parliament on the rupee led to acrimonious exchanges, with an unusually combative Singh hitting out at the Bharatiya Janata Party (BJP).
The prime minister accused the BJP of continuously “opposing and criticising” the Congress-led United Progressive Alliance government.
“If you are worried about investors’ confidence, conduct of parliament is an important factor. I do recognize there is a problem, it can be resolved if the opposition recognizes the responsibility for conduct of parliament”, he said.
Opposition leader Arun Jaitley said the house wanted to know about the measures taken by the government to battle the current economic situation and was not interested in political sermons.
Separately, the BJP called for early parliamentary elections to end what it said was the present atmosphere of “uncertainty” in the country.
BJP leader L K Advani said the request was made in a memorandum submitted to President Pranab Mukherjee.