59-60 right value for rupee, says Chidambaram

Finance Minister P Chidambaram said on Friday the right value of the rupee is 59-60 to a dollar and it should not overshoot that level.

According to the real effective exchange rate of the rupee, "the right level of the rupee should be at 59-60 to American dollar and the currency should not overshoot that level," he said.

Chidambaram was talking to reporters after meeting exporters in Mumbai in late afternoon.

The Indian currency on Friday traded at 62.48, down 41 paise against the US dollar at 1645 hours.

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Asked what he has offered to exporters, Chidambaram said export credit should be treated like priority sector lending and his ministry is talking to RBI about this.

"The Finance Ministry supports the idea of treating bank credit to exporters as priority sector lending; the ministry is talking to the Reserve Bank on this."

Currently, priority sector lending, which comes at a cheaper rate, is limited to agriculture and other segments like MSMEs. RBI mandates domestic banks to set aside as much as 42 per cent of their total loan book towards PSL.

The rupee had been one of the worst-hit currencies among emerging markets and lost over 20 per cent against the dollar since the beginning of the fiscal.

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Late last month, it plunged to a life-time low of 68.85 to a greenback.

The rupee's trouble began after the US Federal Reserve hinted in late May that it may stop its $85 billion bond buyback programme sooner than expected, which led to a flight of capital back to the American shores from emerging markets, including India.

However, within the first fortnight of the new Reserve Bank of India Governor Raghuram Rajan taking charge, the domestic unit regained more than 10 per cent of its lost value, only to lose a part of it, following the 0.25 per cent hike in repo rate on September 20.