Kolkata

Chairmanof the Economic Advisory Council to the Prime Minister (EAC-PM), S Mahendra Dev, on Wednesday said that Indian Rupee is expected to stabilise at the 92-93 level against the US dollar and expressed optimism that foreign investment flows will improve in the near future as geopolitical tensions ease and macroeconomic fundamentals remain strong. Dev said the currency had faced pressure due to global uncertainties, including the recent conflict between the United States and Iran, and the withdrawal of foreign institutional investors (FII). His remarks come after a temporary ceasefire between the US and Iran has helped calm global markets, easing fears of supply disruptions in the oil market and reducing volatility in currencies, including the Rupee.

“Rupee is stabilising at 92-93. Because of global war-related headwinds and FII withdrawals, there was pressure. But despite these odds, Rupee will stabilise at these levels. One should not worry,” Dev said on the sidelines of the Bharat Chamber of Commerce interactive session. Rupee had recently crossed more than 95 against the US dollar. The chairman of the EAC-PM noted that India’s economic resilience and sound macroeconomic fundamentals provide the capacity to absorb external shocks.

“The resilience of the Indian economy is strong. Our macro fundamentals are good, and we have fiscal space to absorb shocks. Many countries do not have that advantage,” he said. According to Dev, India’s fiscal position allows continued spending on infrastructure and welfare even during global uncertainty. “We can continue capital expenditure and social spending, which many countries cannot do. Our fiscal management is also good,” he said. Dev added that the current account deficit could go up to 2 per cent of the GDP, and our present level is about 1.3 per cent, so that is not posing a major concern. The current account deficit can go up to around 2 per cent from the current level of 1.3 per cent, and “so we have headroom”, he said.