The intrinsic value of the Indian rupee is between 58 and 60 against the dollar, a senior finance ministry official said on Monday, adding that overseas speculators were partly responsible for the sharp fall in the currency over the past few months.
The partially convertible rupee was trading at 62.53/54 per dollar at 9.03 am, compared to its close of 62.23/24 on Friday.
Arvind Mayaram, economic affairs secretary at the finance ministry, also said that a fall in bulk diesel demand this fiscal year will save the government about $1 billion. Diesel accounts for over 40 per cent of fuel consumption in the world's fourth-biggest energy user, whose crude import bill was $144 billion last fiscal year.
Mayaram said he expected foreign direct investment flows of about $36 billion if current trends continues. Net FDI in the first quarter of this fiscal year rose to $9 billion from $5 billion in the same period a year earlier, Mayaram said last week.
ndian rupee emerged as the worst performer among its global peers with a fall of 8.7 per cent last month, owing largely to economic slowdown and poor investor confidence.
The fall in rupee value against the US dollar was the worst compared to its peers across Asia, Americas, Africa, Europe and the Middle East in August, as per the latest data compiled by the World Federation of Exchanges (WFE).
The rupee fell to an average of 66.07 in August from 60.80 in the previous month against the US dollar, marking a drop of 8.7 per cent, although there has been some recovery in the current month.