The Indian rupee has fallen 22 percent against the dollar since the start of the year. Its decline has accelerated since June when the U.S. Federal Reserve announced it was considering tapering its monthly bond-buying program which has helped boost emerging markets and their currencies.
(Read more: How severe was India's slowdown in April-June?)
The decline has left members of India's government scratching their heads as to how to stop the rout and Prime Minister Manmohan Singh even tried to put a positive spin on the Indian economy and currency last week, telling parliament last Friday that the rupee's fall in value was part of a needed adjustment that would make Asia's third-largest economy more competitive.
Mobius said the government needed to focus on boosting economic sentiment and strengthening the rupee and had to get "its act together."
(Read more: Three charts that explain why India is in trouble)
With global investors looking ahead to September 18, when the Fed could decide whether to taper imminently, analysts fear emerging markets will suffer even more. Mobius dismissed such concerns and said that foreign investments into countries like India could even pick up again.
(Read more: India's drive to boost investment just isn't working)
"I do not think there will be much change because a lot of this has been discounted. The big story would be of course to take shoulder from Bernanke and if funds do come in there could be quite a dramatic shift towards direct financing and very rapid increase in money supply, which will be quite bullish for markets around the world. But at this stage it is not clear if that will happen," he said.
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