Rupee Not Collapsing, RBI Monitoring Its Course, Nirmala Sitharaman Tells Rajya Sabha

Finance minister Nirmala Sitharaman on August 2, Tuesday, said there was no collapse of the rupee, asserting that the local currency was actually on way to finding its natural course. Sitharaman’s comments came amid a decline in the rupee’s value against the US dollar despite the Reserve Bank of India taking necessary steps to keep it within limits. Sitharaman informed the Rajya Sabha that the RBI is continuously monitoring the local currency and intervening only if there is volatility.

“The RBI interventions are not so much to fix the value of the Indian Rupee because it is free to find its own course,” the finance minister informed MPs at Rajya Sabha during the Question Hour of the ongoing monsoon session of the Parliament. The rupee recently fell to its all-time low of 80 per dollar but has now regained its track.

Replying to supplementaries, she said interventions that are happening from the RBI side are more for containing volatility that is happening between the Indian rupee and the US dollar and so on.

“Even the interventions being made by RBI are not so much to determine the value – increase or decrease, of the Indian rupee. It is not for that. It is more to avoid the volatility and allow it to find its course. “India, like many other countries, is not pitching its currency at a level extraneously. So the ways and which we want to strengthen… the RBI and the Ministry are fairly engaged in it,” she said as members expressed concerns over the decline in the value of the Indian currency.

On suggestions that non-resident Indians should be allowed to make remittances in foreign currency, she said it is not an assurance that the Ministry of Finance will give but she can only pass on the suggestion to the RBI. Sitharaman said the rupee has seen more fluctuations against the US dollar but its performance is better than its peers. “We have withstood the impact of the US Fed’s decisions much better than any other peer currencies,” she told the house.

Actually, if you compare the Indian rupee versus other currencies, it is appreciating in its value, she said, urging the members to understand the context and speak about the Indian rupee. “I would like to assure the member that there is no collapse of the Indian Rupee,” she asserted.

On the reserves coming down, she said, “We are still somewhere in the range of (USD) 500 (billion). As of July 22, it was at USD 571.56 billion reserves, she said, adding that it was not a small amount and India is still comfortably placed. “So, I want the house to take into cognizance the Indian rupee’s performance versus others, whether it is the UK Pound and so on and contextualise the performance of Indian rupee versus the US, particularly because of the steps that are being taken by the US Fed,” she told the Rajya Sabha.

“There is no collapse. It is actually finding its natural course. The RBI is continuously monitoring it and intervening only if there is volatility. RBI interventions are not so much to fix the value of the Indian rupee because it is free to find its own course,” Sitharaman said. Earlier, TMC member Luizinho Faleiro claimed in the last six months, the rupee depreciated 28 times by 34 per cent and foreign reserves declined to USD 572 billion by mid-July.