A day after touching an all-time low of 65.56 to the US dollar, the Indian rupee rose to 64.30 in early trade on Friday — opening slightly stronger on fresh selling of the dollar by exporters.
 
Hit by the US Federal Reserve’s preparations to wind down monetary stimulus, which is driving up borrowing costs globally, rupee has lost 17% since May and the stock market is close to its lowest in 12 months.
 
The rupee clawed back marginally a day after finance minister P Chidambaram called for calm and said there was no need to panic.   
 
“We believe that rupee is undervalued and has overshot what is generally believed to be a reasonable and appro

priate level,” he had said in Delhi on Thursday.
 
Chidambaram had stressed there was no need for excessive or unwarranted pessimism. “There is no cause for panic that seems to have gripped the currency market and that is feeding into other markets. We are confident that stability will return to these markets and we can get on with the task of promoting investment and growth.”
 
A sliding rupee is toxic. For a start, it means that India needs to shell out more cash to import fuel, and this in turn raises the prices of transporting goods, leading to higher inflation.
 
And high inflation means that the Reserve Bank of India (RBI) will hesitate to cut interest rates, a step needed to boost economic growth. So consumers need to keep paying large chunks of their income every month towards repaying housing loans, even as the cost of food and petrol rises and the prospect of decent salary hikes recedes because the economy is struggling.
 
Amid the slide, the Deutsche Bank said in a research note the rupee could touch 70 level in a month’s time.
 
The collapse of the rupee is derailing India’s hopes of raising more than $6 billion from the sale of stakes in state-run firms, jeopardising a key plank of Chidambaram’s blueprint to reverse the country’s economic malaise.