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Global factors responsible for rupee depreciation: FM
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IANS | 18 Jul, 2022
Amid depreciation of the rupee against dollar, Finance Minister Nirmala
Sitharaman said in the Lok Sabha on Monday that global factors such as
the Russia-Ukraine conflict, soaring crude oil prices and tightening of
the global financial conditions, were the major reasons for the
weakening of the Indian rupee against the US dollar.
She added that another reason was that the foreign portfolio investors have withdrawn about $14 billion from the Indian equity.
Sitharaman
said that currencies such as the British pound, the Japanese yen and
the Euro have weakened more than the Indian rupee against the US dollar
and therefore, the Indian rupee has strengthened against these
currencies in 2022.
The depreciation of a currency is likely to
enhance export competitiveness which in turn impacts the economy
positively. The depreciation also impacts the imports by making them
more costly.
The Reserve Bank of India (RBI) regularly monitors
the foreign exchange market and intervenes in situations of excess
volatility. The Reserve Bank of India has raised interest rates in the
recent months that increase the attractiveness of holding Indian rupees
for residents and non-residents.
She said that the recent
measures taken by RBI include the Exemption of Incremental Foreign
Currency Non-Resident (Bank) and Non-Resident (External) Rupee (NRE)
deposits from the maintenance of CRR and SLR up to November 4, 2022.
The
outflow of foreign portfolio capital is a major reason for the
depreciation of the Indian rupee. Monetary tightening in advanced
economies, particularly in the US, tends to cause foreign investors to
withdraw funds from emerging markets. Foreign portfolio investors have
withdrawn about $14 billion from Indian equity markets in FY 2022-23,
she said.
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| Customs Exchange Rates |
| Currency |
Import |
Export |
US Dollar
|
₹95.3
|
₹93.6 |
UK Pound
|
₹127.7
|
₹123.7 |
Euro
|
₹110.65
|
₹106.9 |
| Japanese
Yen |
₹59.75 |
₹57.9 |
| As on 24 Jun, 2026 |
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