Finance Minister Nirmala Sitharaman asserted the Indian rupee must be allowed to “find its own level,” emphasizing that the currency’s value is market-determined and should be viewed in the context of India’s strong economic fundamentals. She made the statement today, Saturday in New Delhi.
The Finance Minister was directly addressing a question on whether the Indian currency’s recent movement against the US dollar—including hitting a record low earlier this week—was a cause for concern.
Economy’s Fundamentals are Key
Sitharaman stressed that exchange rates are “too sensitive” for arbitrary intervention and should not be debated in isolation from the country’s macroeconomic health.
“Look at the fundamentals of the economy, where we stand, some factors are very important which position India in a very different ledge… this currency debate will have to be circumscribed by those realities,” the Finance Minister stated.
She drew a clear distinction between the current economic environment and the past, noting that when her party, while in Opposition, raised concerns about a falling rupee, the circumstances were vastly different.
“I am quite tempted to say lot of things… inflation rate was so high back then, economy was fragile and when your currency also takes a hit it is nobody’s bright spark,” she said, suggesting that today’s fundamentals are far more robust.
Rupee’s Recent Volatility
Sitharaman’s comments follow a period of volatility for the rupee.
- On Wednesday, December 3, the rupee touched a fresh all-time low of 4$90.43$ against the US dollar, weighed down by selling pressure from foreign investors and rising crude oil prices.
- However, the currency rebounded on Thursday, appreciating by 26 paise to close at $89.89$, supported by a softening US dollar index after US non-farm payroll data came in below forecast.
The Finance Minister’s stance aligns with the broader view of the Reserve Bank of India (RBI), which maintains that it does not target a specific level for the rupee and intervenes only to curb excessive volatility, allowing market forces to determine its true value.