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Economy

Sitharaman Dismisses Criticism, Says Rupee Stable Against All Currencies Except Dollar

She further emphasized that the RBI intervenes selectively to stabilize the market and mitigate excessive volatility.

Sitharaman Dismisses Criticism, Says Rupee Stable Against All Currencies Except Dollar

Finance Minister Nirmala Sitharaman. Image: X/@nsitharamanoffc

Finance Minister Nirmala Sitharaman on Sunday (February 2) dismissed concerns over the depreciation of the Indian rupee, asserting that it has weakened only against a strengthening US dollar while remaining stable against other major currencies due to India's strong macroeconomic fundamentals.

In an interview with new agency PTI, Sitharaman acknowledged that the rupee's 3% depreciation against the dollar in recent months is a concern, particularly as it makes imports costlier. However, she rejected claims of an overall weakness in the currency.

“I am concerned but I will not accept the criticism that ‘Oh Rupee is weakening!’ Our macroeconomic fundamentals are strong. Rupee wouldn’t be stable against all the currencies if the fundamentals were weak,” she stated.

Factors contributing to its decline include a widening trade deficit and a surge in the dollar index following indications from the US Federal Reserve of fewer interest rate cuts in 2025.

Reports suggest that the Reserve Bank of India (RBI) has utilized approximately $77 billion from its foreign exchange reserves to prevent a sharp fall in the rupee in the spot market.

Consequently, India’s forex reserves have declined from $701.176 billion on October 4, 2024, to $629.557 billion as of January 30, 2024.

Sitharaman reiterated that the rupee’s volatility is primarily in relation to the dollar.

“Rupee’s volatility is against the dollar. Rupee has behaved in a far more stable fashion than any other currency," she claimed.

She further emphasized that the RBI intervenes selectively to stabilize the market and mitigate excessive volatility.

“RBI also has been looking at ways in which it will interfere in the market only to stabilise the need for avoiding huge volatility-based reasons. So, we are all closely watching the situation," she added.

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