August 13, 2022

Rupee better positioned than many other global currencies: Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman said on Thursday that the rupiah’s performance against the greenback was better than that of many other global currencies despite the depreciation in recent months.

The national currency breached the psychological barrier of 79 to the dollar for the first time on Wednesday, before rising slightly on suspected RBI intervention to close at 78.97.

Responding to a question about the rupiah’s movement on the sidelines of an event here, Sitharaman said: “We are relatively better placed. We are not a closed economy. We are part of the globalized world. So we will be impacted (by global developments). »

The rupiah has lost 6% so far in 2022 and around 2% in June, as the strong dollar, high crude oil prices and sustained capital outflows put pressure on the national currency. However, the Philippine peso lost more than 7% and the South Korean won lost more than 8% against the dollar in 2022.

Currencies in many countries, especially emerging markets, weakened sharply against the dollar, especially after the US Federal Reserve began raising interest rates to curb runaway inflation. Price pressure in economies has increased in recent months, especially after the war in Ukraine hit global supply chains and contributed to a spike in oil prices. As a result, central banks in major economies, including India, have been forced to raise policy rates to control inflation, which will weigh on economic growth prospects.

The RBI has intervened in the market since the outbreak of the Ukrainian war in late February to prevent a sharp depreciation of the rupee. Since February 25, the country’s foreign exchange reserves have fallen by nearly $41 billion.

Last week, RBI Deputy Governor Michael Patra said the central bank was not looking to restrain the rupee to any particular level, but had intervened in the market to curb high volatility and prevent surges. “jerk movements” of the currency.