FM Sitharaman defends rupee stability, says it’s not depreciating against any currency other than USD
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In an interview with PTI, Sitharaman acknowledged the rupee’s nearly 3% decline against the dollar in recent months, calling it a concern due to its impact on import costs. However, she dismissed claims of broader weakness in the local currency.
“I am concerned, but I will not accept the criticism that ‘Oh, the rupee is weakening!’ Our macroeconomic fundamentals are strong. The rupee wouldn’t be stable against all other currencies if the fundamentals were weak,” she said.
Rupee under pressure amid global factors
The Indian rupee has been hitting record lows against the US dollar, driven by multiple factors, including a widening trade deficit and the US Federal Reserve’s hawkish stance on interest rates. The dollar index has surged, affecting emerging market currencies, including the rupee.
To curb excessive fluctuations, the Reserve Bank of India (RBI) has reportedly intervened in the forex market, spending nearly $77 billion from its foreign exchange reserves.
As a result, India’s forex reserves fell from $701.17 billion on October 4, 2024, to $629.56 billion as of January 30, 2024.
‘Criticism should be backed by analysis’
“Rupee’s volatility is against the dollar. It has behaved in a far more stable fashion than any other currency,” Sitharaman asserted. She also highlighted that the RBI is closely monitoring the situation and intervening only when necessary to prevent excessive volatility.
Sitharaman dismissed concerns about the rupee’s depreciation as a “quick argument,” urging critics to consider the broader global economic context.
“In today’s dollar-strengthening environment and the new US administration, the rupee’s movement must be understood in relation to the dollar and its fluctuations. Criticism can come, but it must be backed by a deeper study,” she said.
