Assocham warns about Rs beyond 71

New Delhi: The rupee slide beyond 70-71 will be negative for economy as India is a net importer, said industry chamber Assocham on Thursday. “Indian economy would be able to absorb the rupee depreciation in the range of Rs 69-71 range to a dollar but anything above that level would have negative impact on  inflation, country’s import bill and would consequently impact the trade deficit,” said Assocham.

The industry chamber said that if the Reserve Bank and the government are able to manage the level in the range of Rs 70, it would be good for the exports, but then as things do not seem to be improving on the external front, there is a need to be extra watchful.

Assocham said that being a net importing country, India cannot afford to lose value of its currency much even if other emerging markets lose in a similar way.

“Stability should be the watchword and given the forex reserves of $400 billion, the RBI should remain on top of the situation,” it said.

The rupee on Thursday slid 26 paise to close below the 70-mark for the first time against the dollar, hammered by strong dollar demand amid growing concerns over widening trade deficit.

The currency collapsed to a historic intra-day trading low of 70.40 before closing at fresh life-time low of 70.15 per dollar, down by 26 paise or 0.37 per cent over the previous close.

Meanwhile, consumer durables makers may go for a price hike before the festive season sales to partially pass on the higher import bills.

Sony, Panasonic and Godrej said they are closely watching the currency movement. “The rupee crossing 70 per dollar is putting a lot of pressure on us in terms of input costs. We are evaluating the impact on us, and if it remains like this, we would have to go for a price hike in the near future,” Godrej Appliances executive vice president Kamal Nandi told PTI.