Highlight
- Nirmala Sitharaman said there is no downfall of the unit and it is finding its natural path
- RBI claims that the intervention is not to fix the value of the Indian rupee, it is to avoid volatility
- If you compare Indian rupee with other currencies, it is increasing in value, said Sitharaman
Amid concerns over the depreciation of the rupee against the US dollar, Finance Minister Nirmala Sitharaman on Tuesday said there is no downside to the unit and it is indeed finding its natural course. Sitharaman informed the Rajya Sabha that the RBI is continuously monitoring the local currency and intervenes only when there is volatility.
During Question Hour, the minister told the Rajya Sabha, “The RBI’s intervention in fixing the value of the Indian rupee is not so much as it is free to find its own way.” Responding to the supplement, he said that the interventions being taken by the RBI are more to control the volatility between the Indian Rupee and the US Dollar.
“Even the interventions being made by RBI are not so much to determine the value – growth or depreciation of the Indian Rupee. It is not for that. It escapes volatility and allows it to find its course. There’s more to give.”
He said, “India, like many other countries, is not raising its currency externally. So the way and we want to strengthen it… RBI and ministries are very much engaged in it.” Decline in the value of Indian currency.
On the suggestion that NRIs should be allowed to make remittances in foreign currency, she said that there is no assurance that the finance ministry will give, but she can only suggest to the RBI. Sitharaman said that the rupee has seen more volatility against the US dollar but its performance is better than its peers. “We have withstood the impact of US Fed decisions better than any other peer currencies,” she told the House.
Indeed, if you compare Indian Rupee with other currencies, it is appreciating in its value, he urged the members to understand the context and speak about Indian Rupee.
“I want to assure the member that there is no depreciation of the Indian rupee,” she said. On the shortfall in reserves, he said, “We are still somewhere in the range of (USD) 500 (billion).
He said that as of July 22, it stood at US$571.56 billion in reserves. “Therefore, I would like the House to take note of the performance of the Indian rupee relative to others, whether it is the UK pound and so on, and the performance of the Indian rupee versus the US, particularly because of the steps being taken by the US. Fed ,” he told the Rajya Sabha.
“There is no collapse. It is indeed finding its natural course. RBI is continuously monitoring it and only intervenes when there is volatility. RBI’s intervention to recover the value of Indian Rupee not so much Because it is free to find its own course,” Sitaraman said.
Earlier, TMC member Luizinho Faleiro had claimed that the rupee has depreciated 28 times 34 per cent in the last six months and by mid-July, foreign reserves have come down to $572 billion.
Recalling Narendra Modi’s remarks when he was the Chief Minister of Gujarat, Congress’s Pramod Tiwari asked when the value of rupee would increase. The Finance Minister replied that when the then CM of Gujarat and now the Prime Minister had commented on the Indian currency, the economy was in dire condition on all other parameters.
“The reason for his comments was that inflation was in double digits for 22 consecutive months in India. India had become a fragile economy. Today is the second wave of recovery from the pandemic, Ukraine war India’s currency is still strong, please give it elixir. Keep in mind in time,” she said. Earlier, Minister of State for Finance Pankaj Choudhary said that the government is making efforts on the falling value of the Indian rupee.
During the UPA from 2004-2014, he said the rupee was down 10-12 per cent in one year, while the depreciation in the rupee during the NDA government in the last eight years since 2014 is much less. He said that the value of the US dollar has increased by 4.54 percent.
In a written reply to a starred question, Sitharaman said the exchange rate of the Indian rupee is largely determined by the market forces of demand and supply.
“The Reserve Bank of India (RBI) intervenes only to prevent excessive volatility in the foreign exchange market and to maintain orderly position in the exchange rate without targeting any specific level.
“RBI regularly monitors the foreign exchange market and intervenes in situations of extreme volatility,” the minister said.
Sitharaman also said, “The government and RBI closely monitor developments in the Indian rupee exchange rate and examine macroeconomic policies on a regular basis.”
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