The rupee touched an all-time low on Tuesday to close at 53.23 against the US dollar, spelling concern for forex spenders, such as overseas travellers and consumer of imported goods.
But exporters - like software firms and overseas workers remitting money home - stand to gain.The rupee slid even to 53.52 during the day - before regaining slightly at the end - as foreign investors pulled out Rs 3,200 crore in November, followed by domestic investors, too.
A global investor shift from the crisis-hit euro to the dollar also fuelled the rupee's fall.
"No finance minister will find it comfortable when rupee is declining," finance minister Pranab Mukherjee told Rajya Sabha.
He said, "We are concerned because we cannot remain insulated from the adverse impact of that."
He said if the European crisis extended to a large economy, "any amount of bailout package will not be sufficient and worldwide depression will take place".
But the possibility of a Reserve Bank intervention to shore up the rupee is muted, as the apex bank does not determine the currency value and has limited room to sell dollars to cool the demand.
"More than the RBI, the focus should be on policymakers who should act immediately and take bold measures that will restore investor confidence in the economy," Rajiv Kumar, secretary general, Federation of Indian Chambers of Commerce and Industry, told HT.
A Reuters poll of analysis, however, said the rupee might rise again early next year to trade above Rs 51 to the dollar in three months.
"We expect the global scenario to improve slightly," the analysis quoted Bhupesh Bameta of Quant Capital.
"India still has growth differential with respect to Western countries, so we expect to see more capital inflows."