Finance Minister P Chidambaram on Thursday said, there is no cause for alarm on the rupee and capital inflows were strong, after the rupee fell to a near one-year low early in the day.
"I think the rupee will stabilise and find its correct level," Chidambaram said on the sidelines of a banking seminar here.
The rupee touched the key psychological level of 57 to the dollar in early trade on Thursday, approaching a record low hit nearly a year earlier as fears of an end to the US Federal Reserve's monetary stimulus sent the dollar higher and hit local shares.
Mr Chidambaram also advised investors not to invest in gold, a day after hiking gold import duty to 8 per cent from 6 per cent, in an attempt to ease pressure on India's bloated current account deficit.
The Reserve Bank of India has advised banks against selling gold coins to retail customers, he said.
"I think the Reserve Bank has advised banks that they should not sell gold coins," said Mr Chidambaram.
Following Wednesday's gold import hike, the government may take more steps if needed to curb gold inflows into the country, a senior finance ministry official said.
Rajiv Takru, financial services secretary, said that India could not afford the current levels of forex spending on gold imports, terming it as "wasteful expenditure".
Gold imports by India, the world's biggest buyer of bullion, surged to 162 tonnes in May -- more than twice the monthly average in the record year of 2011.
Gold imports touched a staggering $15 billion in the last two months.
(With inputs from Reuters)
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