Amid fast-depleting forex reserves, the Finance Ministry on Wednesday signalled that it was not in favour of selling the dollar to defend any particular level of the rupee.<\/p>\n
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Photograph: Dado Ruvic\/Reuters<\/span><\/p>\n \u201cLet it (rupee) reach whatever levels it has to reach. We can\u2019t fritter away reserves on defending some artificial, imaginary rate of exchange,\u201d a senior finance ministry official told Business Standard<\/em>.<\/p>\n Forex reserves declined to a near two-year low of $545.65 billion as on September 16, down $85.88 billion from the level that existed on February 25, a day after Russia invaded Ukraine.<\/p>\n \u00a0<\/p>\n Though current reserves are enough for nine months of imports, they were enough to cover 15 months of imports a year ago.<\/p>\n Finance Minister Nirmala Sitharaman on Monday said the RBI has used nearly $75 billion to stem fluctuations and volatility in the rupee-dollar exchange rate.<\/p>\n \u201cThe RBI is not aiming at fixing the exchange rate; the government doesn\u2019t believe in it.<\/p>\n “The Indian rupee and its exchange rate are also left to the market to decide,\u201d she said.<\/p>\n The rupee breached the crucial 81-mark versus the dollar intraday last Friday as the greenback climbed to a 20-year high, backed by the Federal Reserve’s 75-basis point rate hike.<\/p>\n So far this calendar year, the rupee has declined by 8.2 per cent against the dollar, but still outperformed several EM currencies.<\/p>\n \u201cIt (rupee) should fall, otherwise the trade-rated exchange rate will become uncompetitive,\u201d the official said.<\/p>\n The official added that nobody knows by how much the Fed shall further raise the interest rate, as part of its counterintuitive tightening.<\/p>\n \u201cSo these market-determined rates have to be accepted,\u201d he said.<\/p>\n It is wrong to characterise the current phenomenon as \u201crupee fall\u201d, the official said, just because of the rupee-dollar exchange rate.<\/p>\n \u201cThe rupee has appreciated against other currencies, such as the pound and the yen. It (dollar) just happens to be the reference rate,\u201d he noted.<\/p>\n On the expanding current account deficit (CAD), which is expected to touch a nine-year high in the June quarter, the source said this would abate as oil prices have started to fall.<\/p>\n \u201cI think CAD in the second quarter should be better than the first quarter,\u201d he added.<\/p>\n<\/div>\n[ad_2]\n<\/p>\n News From This Website <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"