Finance Minister Nirmala Sitharaman on Friday said the government is carefully watching the impact of falling rupee on the country’s imports.
This remark appeared to have some impact on the rupee in the second half of trading as it recovered from an intra-day low of 79.12 against US dollar and closed 78.94, a rise of 12 paise over its previous close.
“The Reserve Bank of India is very keenly watching the exchange rate. We are not alone in this world. We are also open as an economy... the rupee against the dollar and other currencies versus the dollar, the rupee has performed relatively better,” she told reporters on the sideline of an event to mark 5 years of GST here.
Acknowledging that a falling rupee would impact immediately on imports, which will become expensive, she said, “That is one thing I am very watchful and mindful of because a lot of our industries do depend on some essential goods to be imported upon for their production.”
Ukraine crisis
Emerging market currencies have been falling against the dollar amid geopolitical tensions in the wake of the Russia-Ukraine war, concerns over growth, high global crude prices, sustained inflation and central banks worldwide adopting hawkish monetary policy approach. The rupee breached the psychologically significant level of 79 per dollar level for the first time ever on Wednesday and has also hit a series of lifetime lows this month.
In its Financial Stability Report (FSR) released on Thursday, the Reserve Bank of India said the rupee has performed relatively better than its peers. “While the rupee has been subjected to bouts of downward pressure, it has emerged among the better performing currencies relative to peers,” the 25th FSR report said.