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 steady in opposition to all different currencies due to the robust macroeconomic fundamentals.
In an interview with PTI, she mentioned 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 forex 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 steady in opposition to all of the currencies if the basics had been weak,” she mentioned.
The Indian rupee has been below stress in the previous few months nevertheless it continues to be the least risky forex in opposition to the US greenback amongst its Asian and international friends. The explanations for the rupee hitting report lows nearly each 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 fee 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 all the way 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 steady trend than some other forex,” Sitharaman mentioned. Rupee volatility is noticeable because the greenback is strengthening.
“RBI additionally has been taking a look at methods wherein it’ll intervene out there solely to stabilise the necessity for avoiding enormous volatility primarily based causes. So we’re all carefully watching the state of affairs,” she mentioned.
She termed critics pointing to rupee volatility and depreciation as “a really fast argument”.
“However in at present’s greenback strengthening atmosphere 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 may even must go along with a response with a bit extra research,” she added.
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