‘Greek Tragedy’ May Haunt Rupee: Rajan


New Delhi: The rupee may see some indirect impact from the Greece crisis, even though India has limited direct exposure to the European nation, Reserve Bank of India chief Raghuram Rajan said on Thursday.

“There is of course indirect exposure what Greece will do to exchange rates. How the euro will react to the any Greece issue, how any untoward issue in Greece could lead to a risk-off sentiment among global investors,” Dr Rajan said.

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Cash-strapped Greece became the first developed country to default to the International Monetary Fund (IMF), when it failed to pay an installment of $1.8 billion by June 30. Now, the July 5 referendum in Greece is keenly watched when the European nation will decide on the bailout proposals from its creditors. A “no” vote could increase the possibility of Greece exiting from the euro zone, analysts say.

Despite a flare-up in Greece turmoil this week, the rupee has remained stable. The rupee has remained flat against the dollar this week. Against the euro, the rupee has gained over 1 per cent this week, taking its year-to-date gains to nearly 16 per cent. The euro has weakened against major global currencies this year due to the $1.2 trillion stimulus programme from the European Central Bank and the Greece crisis.

The rupee has fallen around 7 per cent this year against the dollar. Analysts have said that a hike in US interest rates could further strengthen the dollar, though they don’t see the rupee falling below 65/dollar.