New Delhi: Commerce and Industry Minister Kamal Nath today said he is against propping up rupee which has hit a two-year low against the US dollar on concerns of capital outflows from emerging markets.
“We should not calibrate the exchange rate,” Nath said.
He said that a fast depreciation of the domestic currency appears to be an aberration. Asked whether a weak rupee would not lead to a wider trade deficit through expensive imports, Nath said: “Rupee weakening also means higher exports”.
He said that India has a strong institutional system but it did not ‘artificially’ prop up the currency.
Rupee has hit a two-year low of 46.53 against the a dollar on concerns that the global financial turmoil would lead to asset outflows from the emerging economies, including India.
Asked whether he favoured continuation of the sops for exporters which were given when the rupee had notched up sharp gains last year, Nath said: “I am in favour of anything that supports exports because exports create economic activity and generate employment.”
Weakness in the local currency has helped exports grow by 24.6% in the April-July period to $59.19 billion. The export target for the fiscal 2008-09 is set at $200 billion.