Falling rupee short-term trend, India in exceptional period of stability: Top official


New Delhi, Aug 29 (IANS): As the Indian rupee plunged to a fresh record low of 70.60 to a US dollar on Wednesday, a top government official said there is no need to be alarmed as despite the short-term volatility, the country is going through "an exceptional period of stability".

The official said if one takes the long-term view, the rupee is not depreciating against most world currencies and that in fact it is a case of strengthening of dollar rather than weakening of rupee.

"I am not sure why everybody is concerned... For five years now, we have been stable pretty much against every currency. Even against the dollar, if you take a five-year view, we have only depreciated relatively little," Principal Economic Adviser to Finance Ministry Sanjeev Sanyal told IANS in an interview.

"Against the pound, for example, we have appreciated in the last five years. We are broadly stable against Euro. The point I am making is we are not depreciating against most world currencies; what is happening is that the US dollar is strengthening," he added.

Asked if the government is comfortable with the situation, he said: "It's an evolving situation... There is no such thing as equilibrium in economics."

Sanyal said had there been a domestic inflation problem, the depreciation of rupee would have complicated the situation. But, he said, India has inflation in control "which gives us some space to allow this process to happen".

"As per the economic law of impossible trinity, once you have open capital accounts you can either control the monetary policy or the exchange rate," he said, adding that since India has created an explicit monetary policy, the exchange rate has to be determined by the market.

"So, while you can slow (down) the adjustment using the foreign exchange reserves, in the medium term it will find its own level," he added.

Sanyal insisted that the current depreciation of rupee would not have any bearing on the economy.

"We have signed up for this particular model. You have to get out of the idea that there is some sort of a value that we target; we are not doing that at all. The point is, it's a matter of making adjustments according to the evolving situation."

"There is no clear trend in our (rupee) depreciating, and in fact, if you take a longer time in history, this is the only time we have not been systematically declining against world currencies.

"So rather than bemoan the situation...this has been an exceptional period of stability. On a basket basis, we have appreciated...real effective exchange rate, we have appreciated," Sanyal said.

The economist added the key was to maintain reasonable stability over longer periods of time and allow market adjustments where necessary in the medium term, and avoid short-term unnecessary volatility.

"And we have more than adequate foreign exchange reserves to manage any sudden sharp movement if there is a disruption in the world economy," he said.

Sanyal said it is not in India's interest for rupee to also strengthen along with the US dollar when other currencies, including Chinese Yuan, are also depreciating.

"What is the purpose of strengthening with the US dollar if all our trading partners and competitors are depreciating?" he asked.

  

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Comment on this article

  • Raj, Mangalore

    Thu, Aug 30 2018

    India buys oil with dollars, not pound or euro. Indians will be faced with higher petrol prices.

    DisAgree Agree [2] Reply Report Abuse

  • Anthony Lobo, Mangalore

    Thu, Aug 30 2018

    I want to cry for my country and looking the picture of Mahatma Gandhi on that bill. Gandhiji is laughing at us and telling please vote the educated and not uneducated.

    DisAgree Agree [2] Reply Report Abuse

  • ca girishkk, m'lore/dxb

    Wed, Aug 29 2018

    If I recall the mocking of our honorable & well educated Ex PM Shriman Dr MM Singji..., by the present honorable PM..., before 2014 general election, while invoking the Rupee rate against USD.., Now i see a situation like Dog eating its own vomited shit....!!!!

    lol..., votrasi DOMBARATA..., one bye 2 chai+ pakoda...!!!

    DisAgree Agree [1] Reply Report Abuse

  • Mahesh, Pilar

    Wed, Aug 29 2018

    Rupee fall in love with devaluation.

    DisAgree Agree [8] Reply Report Abuse

  • Alan, Mangalore/U.S.A

    Wed, Aug 29 2018

    What a spectacular way of lying and justifying ..... Please be informed that only the U.S Dollar is used as a medium of exchange .What has sterling pounds got to do with trade ..... U.K after Brexit has gone through a rough time ..The bhaktas are an uneducated lot and will fall for this hook , line & sinker. Economy is growing because of population , thats all . but the comman man is doomed.. Just wait and watch . Cost of living is going sky high , Demonetisation was a very very stupid futile exercise. A perfect gentleman like Dr Manmohan Singh was insulted time & again to garner votes. and what a mistake. Fekus blunder was that he surrounded himself with utter unqualified people. Smrithi irani, Jhootley who was never qualified , Ghatkari . the R.B.I chief another Gujju , What a terrible disaster .

    DisAgree [1] Agree [23] Reply Report Abuse

  • PINTO, Mangalore

    Wed, Aug 29 2018

    This official is telling a lie and making us to believe it..

    DisAgree Agree [19] Reply Report Abuse

  • Ravi C, Mangalore

    Wed, Aug 29 2018

    Dear - Principal Economic Adviser to Finance Ministry.

    Because you advise to finance ministry, you have no option but give some jumlas to people. Remember, we live in a country where people make fun of a great Economist, recognized by entire world. Only those will believe in your jumlas.

    DisAgree Agree [22] Reply Report Abuse

  • El En Tea, Mumbai

    Wed, Aug 29 2018

    India is not stable till 2019 April.

    DisAgree Agree [13] Reply Report Abuse

  • Charles D'Mello, Pangala

    Wed, Aug 29 2018

    I dont this has to be published from new Delhi.......Can it come down to expected/or published rupee 40 mark after Mr. Modi takes over....????

    DisAgree Agree [13] Reply Report Abuse

  • David Pais, Mangalore

    Wed, Aug 29 2018

    couple of weeks jhootley said rupee value falling is short time. now rupee value is in ventilator.

    DisAgree Agree [16] Reply Report Abuse

  • Richard, India

    Wed, Aug 29 2018

    "We are going through exceptional period of steability " HA HA HA Bluff masters ek se badkar ek.

    DisAgree Agree [15] Reply Report Abuse

  • HENRY MISQUITH, Bahrain

    Wed, Aug 29 2018

    Keep voting criminals. Situation will go from bad to worse in
    2019... people of India fedup of Chaddi Sarkar..

    DisAgree Agree [11] Reply Report Abuse

  • Roshan, Mangaluru

    Wed, Aug 29 2018

    Amazed, but not surprised. When you speak to an economist, if he gives a narrative and not any numbers to crunch. Expect him to be a lawyer, not an economist. He is economist only by chance.

    If it is for the stable economy, why is RBI is intervening in its free fall?

    DisAgree [1] Agree [11] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Wed, Aug 29 2018

    Another Comedy Statement ...

    DisAgree Agree [22] Reply Report Abuse


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