Wednesday 7 December 2022
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EconomyRupee doing better than many currencies, government continues to insist

Rupee doing better than many currencies, government continues to insist

Reiterating what she had said earlier in the parliament, Finance Minister Nirmala Sitharaman has said that the Indian rupee, as compared to other currencies, has “held back very well” against the US dollar. With the rupee dropping to a lifetime low against the greenback yesterday, Sitharaman said at a press meet in Pune that the Reserve Bank and the finance ministry were keeping a very close watch on the situation.

“If any one currency which has held its own and did not get into fluctuation or volatility as much as other currencies, it is the Indian rupee. We have held back very well,” she told reporters on the final day of her three-day visit to Pune district which is a stronghold of NCP chief Sharad Pawar.

Experts suggest that the latest round of depreciation is triggered by adverse global developments surrounding Russian head Vladimir Putin’s announcement on mobilisation of Russian troops, aimed at boosting annexation of Ukraine.

The has pushed up commodity prices, leading to a record surge in inflation and resulting in steep rate hikes by the US Fed. The rupee slumped 30 paise to close at a fresh lifetime low of 81.09 against the US on Friday, weighed down by the strong currency overseas and risk-off sentiment among investors.

As the rupee breached the 81-mark to the US intra-day Friday, policy makers in New Delhi are in a dilemma with the Reserve Bank of India (RBI) having burnt forex reserves at a dramatic pace this calendar year to prevent exchange rate volatility – an intervention which many in the market believe is to defend the currency at a particular level.

On 22 September, the rupee plunged by 83 p — its biggest single-day loss in nearly seven months — to close at 80.79, its previous record low.

In just eight months between mid-January and mid-September this year, forex reserves have depleted by almost $ 90 billion, or approximately an average of $ 11 billion a month. For the week-ended 16 September, India’s forex reserves stood at $ 545.65 billion compared with $ 634.97 billion in the week-ended 14 January.

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