The volatility in the rupee, which fell to a record low on Tuesday, is a reflection of the uncertainty in the international market, the finance minister said.
Pranab Mukherjee said that the central bank's intervention would have been helpful if the fall was due to domestic factors. We expect there will be a self correction in the market, he told reporters without elaborating.
The rupee hit an all-time low of 52.73 against the dollar as oil refiners and other companies scrambled to buy the U.S. currency, taking its slide to 16.8 percent from its 2001 high in late July.
Exposure to short-term portfolio flows, a rising oil import bill and slowing export growth have heightened the risk on the rupee and the outlook remains bearish. There is also the increasing likelihood the U.S. super committee will fail to reach a deal on debt restructuring, which could trigger another major round of selling of emerging market and risky assets.
At 10:40 a.m. (0510 GMT), the rupee was at 52.58/59 per dollar, after touching an all-time low of 52.73, and 0.8 percent weaker than its previous close of 52.1550/1650. At its record low, the rupee has slumped 16.8 percent from its 2011 high reached in late July.