Finance Minister Nirmala Sitharaman on Sunday rejected criticism over the slide of the Indian rupee, saying it has depreciated solely in opposition to a strengthening US greenback however remained secure in opposition to all different currencies due to the robust macroeconomic fundamentals.
In an interview with PTI, she stated a 3 per cent depreciation within the rupee in opposition to the US greenback in previous few months is a matter of concern because it makes imports costlier, however she rejected criticism that the native foreign money has seen all-round weak point.
“I’m involved however I can’t settle for the criticism that ‘Oh Rupee is weakening!’ Our macroeconomic fundamentals are robust. Rupee would not be secure in opposition to all of the currencies if the basics have been weak,” she stated.
The Indian rupee has been below strain in the previous few months nevertheless it continues to be the least unstable foreign money in opposition to the US greenback amongst its Asian and international friends. The explanations for the rupee hitting report lows virtually every day in opposition to the US greenback vary from widening commerce deficit to a surge within the greenback index after the US Federal Reserve hinted at fewer charge cuts in 2025.
The Reserve Financial institution has reportedly spent $77 billion from its overseas trade reserves to defend the rupee from falling sharply within the spot market, taking India’s overseas trade reserves right down to $629.557 billion as on January 30, 2024, from $701.176 billion on October 4, 2024.
“Rupee’s volatility is in opposition to the greenback. Rupee has behaved in a much more secure style than every other foreign money,” Sitharaman stated. Rupee volatility is noticeable because the greenback is strengthening.
“RBI additionally has been taking a look at methods by which it’s going to intrude out there solely to stabilise the necessity for avoiding large volatility based mostly causes. So we’re all intently watching the scenario,” she stated.
She termed critics pointing to rupee volatility and depreciation as “a really fast argument”.
“However in immediately’s greenback strengthening surroundings and within the new US administration, the rupee should be understood in its relationship with the greenback (and) the fluctuations which come on account of that. Criticisms can come, however these criticisms will even must go together with a response with a bit extra research,” she added.
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