The rupee has fallen more than 10 per cent against the US dollar this year, a slide that has prompted India’s central bank to tap into its dollar reserves to try to support the currency.
However, there is a limit to how long it can keep doing this, said observers.
“The rupee has not fallen to the extent that other emerging market currencies or even developed market currencies are falling,” said Mr Bagla.
“So I think there’s some catch-up there, which could take place through the next three months.”
INDIA’S INFLATION WOES
This poses a challenge when it comes to inflation, which hit a five-month high in India in September.
The cost of imported goods such as crude oil becomes more expensive as the currency weakens, which weighs on India’s current account deficit.