Amid the rupee hitting a new low of 87.29 against the dollar, Finance Secretary Tuhin Kanta Pandey reassured on Monday that there is no cause for concern regarding the rupee’s value as the Reserve Bank of India (RBI) is effectively managing the currency’s volatility.
Pandey stated, “There is no need to worry about the rupee’s value. The RBI is actively handling the fluctuations in the currency.” He emphasized that the Indian rupee operates on a free-float basis, with no fixed rate or control in place. The recent pressure on the exchange rate is primarily due to continuous outflows of foreign funds.
The rupee witnessed a significant decline of 67 paise, reaching a record low of 87.29 against the US dollar in early trading on Monday following the imposition of tariffs by President Trump on Canada, Mexico, and China. This move has sparked concerns about a potential global trade war, leading to further depreciation of the rupee.
In the past year, the Indian rupee has depreciated by 1.8% from its level of 85.61 against the dollar on December 31, 2024. The currency continues to face challenges from persistent foreign fund outflows and the strength of the dollar in global markets, driven by demand from oil importers and subdued risk appetite.
In terms of India’s foreign exchange reserves, there was a notable increase of $5.574 billion to $629.557 billion in the week ending January 24, as reported by the RBI. This growth comes after a recent decline in the reserves, attributed to revaluation and the RBI’s interventions in the forex market to mitigate volatility in the rupee.
Overall, the rupee’s value remains a focal point amid global economic uncertainties, with the RBI playing a key role in managing the currency’s fluctuations.
