Rupee likely to face short-term pressure from Greek Tragedy

NEW DELHI: Planning to travel abroad in the next few weeks? You may end up spending a little more than your original budget. Reason? The Greek crisis, which has kept markets on the edge recently.

Even though the crisis is unlikely to have any major impact on India’s economy mainly due to a strong foreign exchange kiity and upbeat macroeconomic fundamentals, it could put pressure on the rupee, which is likely to devalue the Indian currency further in the coming weeks.

According to an internal SBI study, “The Greek crisis would result in downward pressure on the Indian rupee against the dollar.”

Crisil’s chief economist DK Joshi said that there is likely to be a temporary pressure on the rupee, but no impact in the long run. It is expected to finally settle at 63 to a dollar, he added.

The finance ministry and the Reserve Bank of India are keeping a close watch on the situation.

Until now, the rupee has maintained a stable run mainly on the back of an increase in dollar demand from government banks.

“We are currently monitoring the situation very closely. It would be critical to see what exactly happens in the next few days to understand whether or not the crisis hits home,” a senior government official said.

Foreign exchange reserve is currently around $355 billion. FDI rose by 50% to $36.1 billion by March 2015 against a year ago.