NEW DELHI: Finance Minister Nirmala Sitharaman said the rupee has not weakened but it is the dollar that has strengthened, as she defended the eight per cent slide in the value of Indian currency against the greenback this year.
Speaking to reporters after attending the annual meetings of the International Monetary Fund and the World Bank, she asserted that the fundamentals of the Indian economy were strong and that inflation was low compared to other parts of the world.
“I would look at it as not rupee sliding but as dollar strengthening incessantly,” she said in reply to a question on weakening rupee.
All other currencies around the world are performing against a strengthening dollar, she said.
“It is a matter of fact that India’s rupee probably has withstood the dollar rate going up, the exchange rate in favour of dollar strengthening is there and the Indian rupee has performed much better than many other emerging market currencies,” she said.
The rupee settled at 82.35 against the US dollar on Friday, having touched another record low of 82.68 on Monday after which the Reserve Bank of India (RBI) is likely to have intervened.
India’s forex reserves stood at USD 532.87 billion in the week through October 7, a far cry from USD 642.45 billion seen a year back. The RBI as well as Sitharaman have in the past attributed the decline in the forex reserves to valuation changes arising from appreciating US dollar.
Sitharaman on Saturday evening said the RBI efforts aimed at only curbing excess volatility and its intervention in the market are not to fix the value of the rupee.
The finance minister said inflation in India is at a manageable level.
“The fundamentals of the Indian economy are good, macroeconomic fundamentals are good. The foreign exchange reserve is good. Inflation is also at a manageable level,” she said.
India’s consumer price index inflation in September rose to a five-month high of 7.41 per cent from seven per cent recorded in the previous month, with the print remaining well above the upper tolerance level of RBI’s inflation targeting framework for the ninth consecutive month.
Responding to questions, Sitharaman said she would love to bring the inflation further below six per cent, and the government is making efforts for it.
She said the government is keeping a watch on the growing trade deficit to check if there is a disproportionate increase in the gap against any one country.
“Trade deficit is actually growing,” she said. “It is growing across the board, meaning we are importing a lot more than exporting. And the net is definitely going against us. But, we’re also keeping a watch as to if there’s a disproportionate increase against any one country.”
India’s trade deficit widened to USD 25.71 billion in September as USD 61.51 billion of imports outpaced USD 25.71 billion of exports.