ICICI Bank MD and CEO Chanda Kochhar has said demand for US dollars from oil importers and US Fed's move on tapering its economic stiumulus programme will impact the movement of the rupee going forward.
"How the exchange rate moves forward is dependent on many things. How much of the oil demand comes back to the market, how the tapering moves or doesn't move...," Kochhar told reporters on the sidelines of the annual Bancon meeting in Mumbai.
She also said that rather than worrying about factors like the fate of US tapering, it is important for India to improve its growth prospects and gain the confidence of global investors in a better way.
"More than tapering, we need to focus on creating confidence in our growth model. Whatever dollars are available in the global markets, there is always some amount of investment which is keen to come to the country. They will come provided they have confidence in growth going forward," she said.
The rupee had fallen to all time low of 68.85 against the US dollar on August 28. It has gained since then. On Thursday, it appreciated 19 paise to 63.11 against the dollar.
The Reserve Bank of India has taken some steps to shore up the domestic currency.
On the special FCNR(B) deposit scheme, launched by RBI on September 4, Kochhar said it is a positive step that has helped the battered rupee. The window is scheduled to close by the end of the month, but some analysts say that the central bank may extend it to attract more funds and build reserves.
On Wednesday, RBI Governor Raghuram Rajan had said the NRI scheme along with the special dollar swap for banks had already net $18 billion. Alhough the government and RBI have not put a target for these windows, around $25 billion inflows are expected from these windows by November 30.
Kochhar said going ahead the movement of the rupee will not be dependent on the fate of these windows but other factors, including the demand from oil marketing companies which are gradually returning to the market and the fate of the long expected tapering of the US Fed's liquidity infusing quantitative easing programme.
US Fed has been buying bonds worth $85 billion every month under the programme to stimulate the US economic growth and has impacted investor confidence globally.
On the domestic front, the three state-run oil companies need around $9 billion every month to meet import bills.