Compared to other currencies, rupee has held back very well against dollar: Sitharaman

Compared to other currencies, the rupee has “held back very well” against the US dollar, Finance Minister Nirmala Sitharaman said on Saturday.

With the rupee dropping to a lifetime low against the greenback on Friday, Sitharaman, at a press meet in Pune, said the Reserve Bank and the finance ministry are keeping a very close watch on the situation.

“If any one currency which has held its own and did not get into fluctuation or volatility as much as other currencies, it is the Indian rupee. We have held back very well,” she told reporters on the final day of her three-day visit to Pune district which is a stronghold of NCP chief Sharad Pawar.

Experts suggest that the latest round of depreciation is triggered by adverse global developments surrounding Russian head Vladimir Putin’s announcement on mobilisation of Russian troops, aimed at boosting annexation of Ukraine.

The war has pushed up commodity prices, leading to a record surge in inflation and resulting in steep rate hikes by the US Fed. The rupee slumped 30 paise to close at a fresh lifetime low of 81.09 against the US dollar on Friday, weighed down by the strong American currency overseas and risk-off sentiment among investors.

As the rupee breached the 81-mark to the US dollar intra-day Friday, policy makers in New Delhi are in a dilemma with the Reserve Bank of India (RBI) having burnt forex reserves at a dramatic pace this calendar year to prevent exchange rate volatility – an intervention which many in the market believe is to defend the currency at a particular level.

On Thursday, the rupee plunged by 83 paise — its biggest single-day loss in nearly seven months — to close at 80.79, its previous record low.

In just eight months between mid-January and mid-September this year, forex reserves have depleted by almost $90 billion, or approximately an average of $11 billion a month. For the week-ended September 16, India’s forex reserves stood at $545.65 billion compared with $634.97 billion in the week-ended January 14

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