The crisis-hit currency has been treading water at all-time low levels against the American currency, as it buckles under pressure from soaring oil prices and higher interest rates.
Speaking out on the financial crisis, Marc Faber, veteran investor and publisher of the Gloom Boom & Doom Report newsletter, called on India to raise interest rates “meaningfully” to prop-up the rupee.
He told The Economic Times: “India’s fiscal position is not particularly good.
“It has large deficits and also a current account deficit as far as I know.
“So either India has to increase interest rates meaningfully, which would mean that the economy would be hurt, or they obviously will have a weaker currency over time – and nobody can deny the fact that over the last 10, 20, 30 years, the rupee has been a weak currency.”
This month saw the rupee breach the 74-mark for the first time ever against the US dollar.
As of just before 10am BST, the Indian currency was trading at around 73.76, according to data from Bloomberg.
The Reserve Bank of India held interest rates at the start of October, going against predictions from analysts who were expecting a rate increase.
The RBI’s monetary policy committee (MPC) left the repo rate unchanged at 6.50 percent, with five out of six panel members voting to hold the rate
In its policy statement, the bank said: “Global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook.”
Defending the decision, the bank said it was acting “to further strengthen domestic macroeconomic fundamentals”.
Rahul Gandhi, the Indian National Congress, described the rupee as “broken” in a furious outburst earlier this month about the state of India’s economy.
Yesterday saw the Prime Minister of India issue a desperate call to oil producers to review payment terms to help ease concerns of soaring oil prices.
Oil prices have reached four-year peaks as the market focused on upcoming US sanctions on Iran while shrugging off the year’s largest weekly build in US crude stockpiles.
India currently imports more than 80 percent of its oil needs.