India’s macros strong, rupee depreciation only against USD: Finance Minister Sitharaman

Sitharaman rejects criticism that rupee has seen all-round weakness, says Indian currency least volatile against the US dollar among its Asian and global peers

New Delhi: Finance Minister Nirmala Sitharaman on Sunday rejected criticism over the slide of the Indian rupee, saying it has depreciated only against a strengthening US dollar but remained stable against all other currencies because of the strong macroeconomic fundamentals.

In an interview with PTI, she said a 3 per cent depreciation in the rupee against the US dollar in past few months is a matter of concern as it makes imports costlier, but she rejected criticism that the local currency has seen all-round weakness.

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“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 said.

The Indian rupee has been under pressure in the last few months but it continues to be the least volatile currency against the US dollar among its Asian and global peers. The reasons for the rupee hitting record lows almost on a daily basis against the US dollar range from widening trade deficit to a surge in the dollar index after the US Federal Reserve hinted at fewer rate cuts in 2025.

The Reserve Bank has reportedly spent $77 billion from its foreign exchange reserves to defend the rupee from falling sharply in the spot market, taking India’s foreign exchange reserves down to $629.557 billion as on January 30, 2024, from $701.176 billion on October 4, 2024.

“Rupee’s volatility is against the dollar. Rupee has behaved in a far more stable fashion than any other currency,” Sitharaman said.

Rupee volatility is noticeable as the dollar is strengthening.

“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 said.

She termed critics pointing to rupee volatility and depreciation as “a very quick argument”.

“But in today’s dollar strengthening environment and in the new US administration, the rupee will have to be understood in its relationship with the dollar (and) the fluctuations which come as a result of that. Criticisms can come, but those criticisms will also have to go with a response with a bit more study,” she added.