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Informist, Monday, Feb. 3, 2025

 

 

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--Sitharaman: Approach to exchange rate management has been consistent
--CONTEXT: Sitharaman's written response to question in Lok Sabha
--Sitharaman: Rupee exchange rate mkt determined, with no target or band
--Sitharaman: Rupee depreciation likely to enhance export competitiveness
--Sitharaman: Rupee depreciation may raise prices of imported goods
--Sitharaman: Can't isolate FX rate impact on import cost, domestic inflation
 

 

MUMBAI – Amid the recent sharp fall in the rupee, Finance Minister Nirmala Sitharaman Monday said the impact of the change in exchange rate on domestic inflation and cost of living, driven by higher import costs, can't be isolated. She was answering questions by Lok Sabha member Anto Antony in Parliament.

 

In response to Antony's question regarding the reason for the recent sharp fall in the rupee, and measures taken by the government to mitigate its impact on citizens, Sitharaman said, "the approach towards exchange rate management has remained consistent and well-articulated, in terms of which the value of the rupee is market-determined, with no target or specific level or band."

 

She said the depreciation of the Indian currency is likely to improve India's export competitiveness, "which in turn impacts the economy positively". While the rupee depreciation may raise import prices, the overall impact on domestic prices depends on how much the rise in international commodity prices gets passed on to the domestic market, the finance minister said.

 

Sitharaman said the value of the rupee is determined by the market, with no specific target or band in consideration. She said the approach towards exchange rate management has been "consistent and well-articulated".

 

Regarding the recent sharp downward movement of the rupee, the finance minister enumerated several factors, including a sharp rise in the dollar index, a narrowing interest rate differential between the US and India, foreign fund outflows, and the trade deficit. However, she highlighted that the Indian rupee fell the least among its Asian peers, except the Hong Kong dollar, since Oct. 1.

 

"The US dollar index rose 6.5% from Oct. 1, to Jan. 27, with all major Asian currencies depreciating against the US dollar. Rupee has depreciated 2.9% during this period, least among major Asian currencies, barring the Hong Kong Dollar," the finance minister said.  End

 

Reported by Sourabh Kumar

Edited by Ashish Shirke

 

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