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Business News/ Economy / Rupee will endure dollar strengthening, says Nirmala Sitharaman
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Rupee will endure dollar strengthening, says Nirmala Sitharaman

The Indian currency will withstand the recent strengthening of the dollar, finance minister Nirmala Sitharaman said, reiterating a central bank forecast that the South Asian economy will grow at 7% in the year to March, 2023

Union finance minister Nirmala Sitharaman. (Photo: PTI)Premium
Union finance minister Nirmala Sitharaman. (Photo: PTI)

The Indian currency will withstand the recent strengthening of the dollar, finance minister Nirmala Sitharaman said, reiterating a central bank forecast that the South Asian economy will grow at 7% in the year to March, 2023.

“The Indian rupee has performed much better than many other emerging market currencies," Sitharaman said at a media briefing in Washington D.C. late on Saturday.

The country’s central bank was working to contain the rupee’s volatility, she said, adding that the “rupee will find its own level."

The Indian currency has plummeted to new lows against the US dollar in recent weeks amid fears of a global recession.

While the Narendra Modi-led government is concerned about the global economic outlook and geopolitical challenges, it is confident the country will “stay on course," according to a statement Saturday from the finance ministry.

The International Monetary Fund lowered India’s growth forecast to 6.8% this month on “significant" headwinds. The Reserve Bank of India last month cut its GDP forecast to 7% from its earlier prediction of 7.2%.

India’s Consumer Price Index (CPI) inflation in September rose to a five-month high of 7.41% from 7% recorded in the previous month, with the print remaining well above the upper tolerance level of RBI’s inflation targeting framework for the ninth consecutive month.

Responding to questions, Sitharaman, who also held 24 bilateral and about a dozen multilateral meetings on the sidelines of the IMF and the World Bank meetings, said that she would love to bring the inflation further below 6%, and the government is making efforts for it.

Referring to the fact that several countries like Turkey are facing double-digit inflation, she said countries are being very severely impacted through external factors.

“We are also being impacted through external factors. We are also being impacted. But because of the various measures we’re taking timely, each time we are able to bring it to this level (and) at least hold it. Ideally, at this time to bring it to four will be just very good, but we’re trying," she said.

“So, we have to be conscious of the position that we are in compared to the rest of the world. I’m not asking for celebration but it is true that we are holding together. And I’m very conscious particularly of the fiscal deficit."

She said the government is keeping a watch on the growing trade deficit to check if there is a disproportionate increase in the gap against any one country.

“Trade deficit is actually growing," she said. “It is growing across the board, meaning we are importing a lot more than exporting. And the net is definitely going against us. But, we’re also keeping a watch as to if there’s a disproportionate increase against any one country."

She was responding to a question on the increase in trade deficit against China to nearly $87 billion.

India’s trade deficit widened to $25.71 billion in September as $61.51 billion of imports outpaced $25.71 billion of exports.

“Equally, if you look into the items that are imported, they are less of final consumption goods and more of intermediaries. And when I say more of raw materials and intermediate goods, it’s also got potential for value addition and exports," Sitharaman said.

“So, I wouldn’t want to immediately get anxious about this net deficit, meaning imports being far higher than exports, because I think carefully if you look at it, the kind of imports that are happening are very essential, also for our industrial activity and for our value addition for exports purposes."

PTI contributed to the story.

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Published: 16 Oct 2022, 11:45 PM IST
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