He added that the risks can increase if the Chinese slowdown gathers more speed.
The rupee gained for the second day, climbing 23 paise to a one-week high of 62.07 against the dollar on Wednesday, amid a modest recovery in local stocks and sales of the US currency by exporters and banks.
Despite constraints, if the new government is able to iron out such drags, the outlook for the rupee will be more positive in the near future.
Sustained dollar unwinding from exporters and banks amid weak overseas trend gave a boost to the rupee
Heavy unwinding by foreign portfolio investors and lacklustre equities dampened the sentiment
The rupee had shed 10 paise to close at 66.14.
The IT industry advisories show that they think they've weathered the worst, observes Devangshu Datta.
The RBI fixed the reference rate for the dollar at 64.1505 and for the euro at 72.2720.
However, dealers said that most of the rupee's gains were lost on consistent dollar demand from state-run oil refiners and other importers.
The rupee recovered from more-than three months low of 63.15 in early trade on dollar selling by banks.
Macroeconomic factors under control, says Rajan
The Reserve Bank on Thursday said it has put in place contingency plans to infuse liquidity into the system to deal with any possible volatility in markets on Friday in view of the election results.
The rupee ended lower by 7 paise to 62.31 against the American currency on fresh dollar demand from banks.
The domestic currency had gained by 80 paise, or 1.19 per cent, in previous five trading days.
Government bonds yields are likely to trade in a range, owing to profit booking.
The rupee on Wednesday vaulted to seven months closing high of Rs 44.45/46 per dollar, helped by sustained heavy foreign fund inflows in the absence of central bank intervention.
Increased demand for the American unit from importers and banks, affecting the value of the rupee
The rupee resumed higher at 64.40 a dollar from Friday's close of 65.24 and touched a low of 64.54 at the interbank foreign exchange market.
The rupee had ended five paise lower at 61.92 on Tuesday.
The NSE Nifty too ended 58.60 points, or 0.54 per cent, higher at 10,967.30 after shuttling between 10,985.15 and 10,928 during the session.
The rupee plunged by 28 paise to more than 2-month low of 66.47 against the US dollar on Monday.
Maruti Suzuki was the biggest gainer among Sensex scrips, rising 5.89 per cent, followed by M&M up 5.29 per cent.
The rupee on Monday ended lower by 23 paise to close at an over two-week low of 67.31 against the US currency.
India's top financial bureaucrat denied on Monday that the government was seeking dollar loans to repay some of its offshore debt.
RBI is expected to cut policy rates by 50 basis points by 2016.
The Reserve Bank of India had taken steps to tighten liquidity in a bid to curb volatility in the forex market after the rupee fell to a record low of 61.21 to the dollar on July 8.
The rupee recovered by 15 paise at 65.49 against the US dollar.
'The market won't wait for earnings to recover.'
The domestic currency tumbled by 45 paise or 0.68 per cent in two days.
The local currency had lost 119 paise in the past five sessions on rising worries over current account gap and fears that withdrawal of US stimulus will hit inflows from overseas.
