Union Finance Minister Nirmala Sitharaman on Tuesday defended the recent decline in the Indian Rupee against the US Dollar saying that the currency has not collapsed and the fluctuations to record lows are driven more by the dollar. FM stated that the performance of the rupee is better than its peer currencies.
FM Sitharaman further added that the government and the Reserve Bank of India (RBI) are finding ways to boost inflows into the country. “Ways in which we want to strengthen having foreign currencies coming into India are very many and RBI and the ministry are fairly engaged in it,” the finance minister said in the upper house of parliament in response to a lawmaker’s question.
Explaining that interventions by the RBI are not so much to fix the value of the Indian rupee as it is free to find its own course, Sitharaman shared the central bank has stepped in to shore up the rupee by selling dollars in the spot and futures market.
“There are discussions between the government and the RBI to see how best we can have various different similar such schemes through which we are able to draw foreign remittances directly,” the minister said. The RBI is continuously monitoring the rupee and intervening only if there is volatility.
Rupee past the 80-vs dollar mark
The Rupee breached the psychological mark of 80 on July 19 for the first time ever. This slump in Rupee, and other Asian currencies, is largely due to the underlying strength of the US Dollar and the foreign portfolio investments (FPI) equity outflows.
Recently, the Centre listed a host of reasons for the rupee hitting historic lows in recent months. These include Covid-19 related economic disruptions, US-China trade war, soaring crude oil prices, Russia-Ukraine war.
Currencies like British pound, the Japanese Yen, and the Euro have weakened more than the Indian Rupee against the US dollar and therefore, the Indian Rupee has strengthened against these currencies in 2022, the government had said.
