New Delhi: Finance minister Nirmala Sitharaman on Saturday said that the rupee is not sliding but the dollar strengthening incessantly.
Sitharaman was addressing a press conference in Washington D.C. when a reporter asked her assessment of the challenges the rupee could see in the days ahead against the backdrop of geopolitical tensions, and what measures are being taken to tackle the rupee’s slide.
“First of all, I would look at it not [as] the rupee sliding but as dollar strengthening incessantly. So obviously all other currencies are performing against the strengthening,” she said.
She added, “I am not talking technicalities but it is a matter of fact that India’s rupee probably has withstood this dollar rates going up, the exchange rate in favour of dollar strengthening is there and I think Indian rupee has performed much better than many other emerging market currencies.”
“But I think the efforts are by the RBI more towards maintaining a certain, let’s say, more towards seeing that there are not too much of volatility. It is not to intervene in the market to fix the value of the rupee. So, containing the volatility is the only exercise that RBI is involved in. And, I have said this before, the rupee will find its own level,” the finance minister said.
The finance minister was on an official visit to the US from October 11 to 16.
Her statement comes days after the rupee hit a record low of 82.22 against the US dollar.
Forex dealers told the Indian Express that the rupee fell to a fresh all-time low as the dollar remained strong and a rally in global crude oil prices weighed on the overall market sentiment.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has decided to cut oil production by two million barrels per day. This is the largest cut since the beginning of the COVID-19 pandemic. This will increase India’s oil import bill, and eventually will increase the cost of transport fuel in the country.
The finance minister also claimed that the inflation rate – which is hovering over 7% in India – is at a “manageable” level. She added that the government is working to bring it down under 6% and “ideally” to 4%.
Meanwhile, her comments have sparked off a war of words between the Bharatiya Janata Party (BJP) and the Congress. While the Opposition has mocked her comments, the BJP defended them.
Congress spokesperson Gourav Vallabh, in a video post on Twitter, said, “When Modi had taken over as Prime Minister, one dollar was equivalent to Rs 58.43, which today is Rs 82.32. This means that compared to the dollar, the rupee has depreciated by 41% in the last eight years. But you are saying that the rupee is not falling but the dollar is increasing.”
He went on to say, “Sometimes you say that you cannot do anything about the prices of onions because you do not eat onions. Your wrong policies have turned our country’s demographic dividend into a demographic disaster. I want to ask you whether employment opportunities have increased by 41% in the last eight years? Has there been an increase of 41% in people’s income? But the dollar is available for 41% more as compared with rupee.”
Also read: Avocados and Onions: Nirmala Sitharaman Finds Herself in a Soup Again
He added that when the rupee’s value depreciates, the price of crude oil increases.
“Then you will say what could you do, this is dynamic pricing and it has increased in the international market. We increase the prices because we import 85% of petrol and diesel. We import half of the country’s needs for LPG. We import 60-65% of the components of electronic equipment.”
Referring to India’s global hunger index, Congress leader Rahul Gandhi said, “India ranks 107th out of 121 countries in hunger and malnutrition! Now the prime minister and his ministers will say, ‘Hunger is not increasing in India, but people are not feeling hungry in other countries’. For how long will RSS-BJP work to weaken India by misleading the public from reality?”
India has ranked 107th out of 121 countries in the global hunger index 2022, down from the 101st position the previous year. With a score of 29.1, India falls under the ‘serious’ category of hunger.)
Aam Aadmi Party MP Raghav Chadha shared a video of the finance minister’s latest comments and remarked, “My economics isn’t weak, yours is stronger.”
Former Odisha Congress president Niranjan Patnaik said, “When Rupee was at 50 during UPA govt, India’s economy was in deep crisis! Now Rupee is at 80 under the Modi govt, and it’s ‘AmritKaal’!”
In a statement, National Congress Party spokesperson Clyde Crasto told the Indian Express: “The ‘rupee not sliding, but dollar strengthening’ is an absurd statement made by finance minister Nirmala Sitharaman. Making such statements will not hide the failure of her government in taking care of our country’s economy.”
Defending Sitharaman’s explanation on the rupee’s slide, BJP’s IT in-charge Amit Malviya said, “People who can’t do basic maths are commenting on rupee-dollar, which is far too complex for their tiny brains…She clearly said, ‘The Indian rupee has performed much better than many other emerging market currencies’.”
He added, “Weakening of Rupee was seen in 2009-14, during Congress’s inept rule, which had resulted in poor macro indicators, making India a fragile economy. Weak GDP growth, weak capital inflows, high double-digit inflation, high deficits, slowing exports and stalling reforms.”
BJP national spokesperson Sambit Patra said, “When Rupee gets weaker against all currencies like it happened during UPA in 2013 is called ‘Rupee getting weaker’.”
He further said, “When most of the currencies are depreciating against $ due to fed rate hikes is called $ getting stronger that’s what happening right now. It should also be noted that ₹ has appreciated against most of the currencies therefore it shouldn’t be called as ₹ getting weaker. “
In December 2019, Sitharaman was criticised for saying ‘I don’t eat onions’ when the Opposition, during a Lok Sabha session, had raised the issue of onion price rise.
She had said, “I don’t eat a lot of onions and garlic, so don’t worry. I come from a family that doesn’t care much for onions.”