Finance Minister Nirmala Sitharaman responded to criticism surrounding the Indian rupee's decline, defending its performance as largely stable against most currencies, despite depreciation against the strengthening US dollar. In an interview with PTI, she acknowledged that the rupee's 3% depreciation against the dollar in recent months is concerning due to its impact on imports, but she rejected the criticism that the rupee was weakening across the board.
Sitharaman emphasized that the rupee's stability against other global currencies reflects India's strong macroeconomic fundamentals. She countered claims of a widespread decline in the rupee's value, pointing out that if India's fundamentals were weak, the currency wouldn't have remained stable against other currencies.
While acknowledging the pressures on the rupee, including factors such as a widening trade deficit and the dollar's surge following the US Federal Reserve's signals on fewer rate cuts in 2025, she highlighted that the rupee has been less volatile than many of its Asian and global counterparts. Despite the challenges, the Reserve Bank of India (RBI) has reportedly spent USD 77 billion from its foreign exchange reserves to support the rupee, bringing India’s foreign reserves to USD 629.557 billion as of January 30, 2024, down from USD 701.176 billion in October 2024.
Sitharaman pointed out that while the rupee’s volatility is noticeable against the strengthening dollar, the RBI is closely monitoring the situation and intervening where necessary to minimize extreme fluctuations. She suggested that critics of the rupee’s depreciation need to consider the broader global economic context, particularly the dynamics of the US dollar’s strengthening and the implications of the current US administration’s policies. In her view, criticisms should be met with a more informed and studied response, rather than quick judgments.
