Defending the Rupee. Indian rupee performed well against many EM currencies despite US dollar strengthening: FM Sitharaman

With the rupee dipping to a record low, Finance Minister Nirmala Sitharaman defended the trend by saying that it is the dollar that is strengthening. She also said that the Indian rupee has performed well against currencies of many other emerging economies.

During the calendar year till date, Indian rupee has dropped over 8 per cent against US dollar. On Friday, rupee ended at 82.19 against a dollar.

“First of all, I will look at it, not as Rupee sliding but as USD strengthening incessantly. So, obviously, all other currencies are performing against the strengthening of the USD. It is a matter of fact that Indian Rupee has probably stood this USD rates going up, exchange rate in favour of the USD. The Indian rupee has performed much better than many other emerging market currencies,” Sitharaman said in a press briefing in Washington, on Saturday (Sunday IST), at the fag end of her US tour.

Inflation

She mentioned that the efforts of RBI are more towards seeing that there is not too much volatility, it is not to intervene in the market to fix the value of the rupee. “Containing the volatility is the only exercise RBI is involved in and I have said this before that Rupees will find its own level,” she added. It may be noted that Forex Reserve has seen depletion of over 100 billion in a year mainly on account of RBI intervention in the forex market. However, RBI Governor Shaktikanta Das said about 67 per cent of the decline in reserves during FY23 is due to valuation changes arising from an appreciating US dollar and higher US bond yields. This means just 33 per spent to support the rupee.

Falling rupee has also impacted inflation in one way and other as India imports more than 85 per cent of its crude and nearly 66 per cent of edible oil requirements. The latest inflation print shows retail inflation based on Consumer Price Index (CPI) surged to 7.41 per cent in September. When asked about higher inflation, Sitharaman said: “Fundamentals on macroeconomics are good and foreign exchange reserve is good. We are in a comfortable situation and that is why, I keep repeating inflation is at a manageable level too. We’re making efforts to bring it further down,” she said. Further, she mentioned that the trade deficit is growing and is growing across the board. But, the Government is keeping a watch if there is any disproportionate increase against any one country.

G20 summit

Talking about cryptocurrency, she highlighted the technologically driven regulatory framework for G20 members. “We want to bring up matters related to cryptocurrency on the table of G20 so members can discuss it and arrive at a framework or SOP so globally, countries can have a technologically driven regulatory framework,” she said.

Speaking about India’s G20 Presidency, she highlighted the country’s increased use of digital applications and said that it will be showcased to member countries. “There are suggestions by many members that during G20, we should showcase what we’ve done in our digital achievements have spread in the country,” she said

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