Indian rupee to stabilise very soon: Official

Kolkata - A slump in the rupee tracking weakness in its global peers and a wider trade deficit limited the gains on the equity indices.

The Indian rupee, which has been depreciating against the dollar on account of external factors, will "stabilise" soon with the fundamental equation for trade unchanged, an official said here on Saturday.
"This breaching of 70 [mark] was on account of external factors largely on what happened in Turkey. Our fundamental equation for the trade has not been changed. Oil prices have not gone up," Union Finance Ministry's Department of Economic Affairs Secretary Subhas Chandra Garg said here. "The demand-supply situation for dollars in the Indian economy has not got altered... our perception is that very soon it [rupee] will stabilise and it might go back to Rs68-69."
On Thursday, the rupee had touched an all-time low of 70.39-40 in the spot market and settled at a record closing low of 70.16 against the greenback.
Speaking on capital outflow, Garg said: "There was an outflow of $9 billion in terms of portfolio investments in the first three months of the current fiscal and last year, we had a inflow of $20 billion. But in July, there was no outflow. In August, there is positive inflow of about $1.5 billion." 
"It makes it clear that the episode arising out of Turkey essentially does not alter FPIs' [foreign portfolio investors'] perception about the investability of India. I do not think that will change," he said on the sidelines of a Merchants' Chamber of Commerce and Industry's event.
Garg also said that public sector banks, which are under Prompt Corrective Actions (PCA) imposed by the Reserve Bank of India, would do better going forward and there would be lesser requirement for provisioning of bad loans.
"Profitability of these banks will be coming back. They are expected to come out of PCA in the next one to two years," he added. 
Indian indices rise
Meanwhile, easing inflation data along with braodly positive global cues lifted the key Indian equity indices during the week with the NSE Nifty50 ending at a record closing level on Friday.
India's annual rate of inflation based on wholesale prices eased to 5.09 per cent in July from a high of 5.77 per cent in June, official data showed on Tuesday. The retail inflation for July released on Monday stood at 4.17 per cent, down from 4.92 per cent in June.
However, a slump in the Indian rupee tracking weakness in its global peers and a wider trade deficit limited the gains on the equity indices.
On a weekly basis, the S&P BSE Sensex closed at 37,947.88 points, higher by 78.65 points or 0.21 per cent from its previous close.
Similarly, the wider Nifty50 on the National Stock Exchange made gains. On Friday, it ended at a record closing high of 11,470.75 points, higher by 41.25 points or 0.36 per cent from the previous week's close.
Market breadth was negative in three out of the four trading sessions of the week, analysts said.
Markets extended winning streak for the third consecutive week as the Index of Industrial Production and Consumer Price Index data gave boost to the market, said Rahul Sharma, senior research analyst at Equity99.
According to Hem Securities director Prateek Jain: "Traders and investors saw modest losses due to Turkish concerns in the beginning of the week. But, towards the fag end of the week, markets reflected recovery."