RBI is continuously monitoring the local currency and intervenes only when there is volatility.
RBI is continuously monitoring the local currency and intervenes only when there is volatility.
There is no depreciation in the rupee and the Reserve Bank of India is only intervening in the foreign exchange markets to rein in volatility, Finance Minister Nirmala Sitharaman assured Parliament on August 2, 2022.
The minister also emphasized that India, unlike many other countries, is not fixated on depreciating the currency at a particular level, and added that the government is working with the central bank to increase foreign exchange inflows. .
“The volatility of the Indian rupee is higher against the US dollar and even there, it has outperformed its peers. We have weathered the impact of US Fed decisions better than any other equivalent currencies, and the rupee is appreciating in value relative to other currencies. Let us understand the context and I assure you there is no fallout,” Ms Sitharaman said during Question Hour in Rajya Sabha.
While India’s foreign exchange reserves declined to $571.5 billion from about $600 billion in July 2022, the minister pointed out that this is ‘not a small amount’ and the country is still located ‘comfortably’.
The rupee, he said, is ‘actually finding its natural path’ and the Reserve Bank of India[is]continuously monitoring it and intervening only when there is volatility. No,” she noted.
“I would like the House to take note of the performance of the Indian rupee, such as its performance against the UK pound and the US dollar, especially with reference to the various steps being taken by the US Fed,” she said.
Minister of State for Finance Pankaj Choudhary said that the rupee had fallen by 10% to 12% in a few years during the UPA regime from 2004 to 2014, while it had depreciated by a maximum of 7.8% in a year under the eight years of the current administration. tenure from 2014
In a written response, the junior finance minister attributed the depreciation of the rupee against the US dollar to global factors such as the Russo-Ukraine war, rising crude oil prices and tightening of global financial conditions. “However, the Indian rupee has strengthened against major currencies such as the British pound, the Japanese yen and the euro,” he said.
When Congress MP Pramod Tiwari referred to the remarks made by Prime Minister Narendra Modi in 2013 (in his tenure as Chief Minister of Gujarat) that brought down the country’s stature, Ms Sitharaman said India’s economy was one of them. has become. The fragile five economies of that time.
“When the then CM of Gujarat and the current PM made a statement about the Indian currency in 2013, it was because India’s position was quite serious on all other parameters as well. The economy had become one of the fragile five…. There was double digit inflation in the economy for 22 months and the Indian economy had reached such a dire condition just because of the taper tantrum,” she pointed out.
“Today, there is pandemic, there is recovery, there is second wave, Omicron, Russia-Ukraine war, whole world supply chain is disrupted, India’s currency still remains strong,” Ms Sitharaman concluded.
On Tuesday, as per provisional data, the rupee closed 41 paise higher at 78.65 against the US dollar, having rallied to the US dollar from a low of $80 a few weeks ago.