Foreign exchange market being monitored: Jaitley

Sending out a word of assurance, Union Minister Arun Jaitley said on Wednesday India’s foreign exchange reserves are comfortable by global standards and sufficient to mitigate any undue volatility in the currency market.

His remark has come a day after the rupee slipped to an all-time low of 70.09 in intra-day trade. The country’s currency exchange rate market is being monitored to address any unexpected situation, he said.

“The developments are being monitored closely to address any situation that may arise in the context of the unsettled international environment,” Jaitley said in a series of tweets.

The Minister, who is recovering from a renal surgery that took place in May, is expected to resume office in the Finance Ministry soon. Railway Minister Piyush Goyal has been given additional charge of the Finance Ministry for now.

According to the RBI’s weekly statistics data, the nation’s forex reserve was $402.70 billion as on August 10. Though it declined by $1.4 billion between July 27 and August 3, and there appears to be further depletion, the reserve are still above $400 billion, which gives some comfort.

Observing that recent developments in Turkey have generated a global risk aversion towards emerging market currencies and the strengthening of the dollar, Jaitley said India’s macro fundamentals, however, remain resilient and strong. The IMF recently said India will be an engine of growth for the global economy for the next few decades and it could play the role China did for the world economy. It also said India now contributes to — in purchasing power parity measures — 15 per cent of the growth in the global economy, which is substantial.

The rupee has been one of the worst performers of all emerging market currencies. It has lost over 9.49 per cent of its value so far this year against the grim backdrop of India’s ballooning fiscal deficit and surging crude prices. August saw the largest devaluation of the rupee against the dollar in the past year. A rebound in oil prices, FII outflows and concerns over current account deficit weighed on the domestic currency.

However, traders said that heavy intervention by the RBI predominantly resisted the rupee’s sharp depreciation and staged a spirited recovery from its life-time low. A relief rally in local equities amid a recovery in global markets, including the Turkish lira, further supported the forex sentiment.

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