Thursday, July 20 2006 11:00 Hrs (IST) - World Time -

New Delhi: Finance Minister P Chidambaram yesterday (July 19,2006) allayed fears of huge volatility in the forex market after fall of the rupee against the dollar, saying the Indian currency is stable in terms of real effective exchange rate and is likely to appreciate.

"It is quite likely that the rupee will appreciate. We should not forget that the rupee was 47 (against the dollar) in 2003 also," Chidambaram told reporters after the rupee fell to a three year low of Rs 46.93 today.

He said the rupee value reflects demand and supply conditions in the market.

The Indian currency touched a three-year low of Rs 46.82 against the dollar as global crude prices hovered near record highs and the dollar remained higher in the overseas market.

However, the rupee bounced back yesterday due to some dollar selling by state-owned banks and ended at 46.70/71 against the US currency.

The Indian currency fell again today and is currently ruling at Rs 46.93 against the dollar.