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RBI's intervention focused more on rupee exchange rate fluctuation: FM

Sitharaman said that the action taken by the US Federal Reserve has an "impact on all currencies", adding that "we have to only be sure that fluctuation is not going to be severe".

September 27, 2022 / 10:00 AM IST
Finance Minister NIrmala Sitharaman | Illustration: Moneycontrol

Finance Minister NIrmala Sitharaman | Illustration: Moneycontrol

The interventions made by the Reserve Bank of India (RBI) are "focused more towards avoiding fluctuation in rupee's exchange rate", Finance Minister Nirmala Sitharaman said.

The central bank's actions are "not aimed at fixing the exchange rate", Sitharaman added, while speaking at CNN-News18's Townhall in Chennai.

The finance minister's remarks came on a day when the rupee plunged 58 paise to close at an all-time low of 81.67 (provisional) against the US dollar, as the strengthening of the American currency overseas and risk-averse sentiment among investors weighed on the local unit.

Sitharaman said that the action taken by the US Federal Reserve has an "impact on all currencies", adding that "we have to only be sure that fluctuation is not going to be severe".

Also Read | Building institutions such as GST Council takes time and patience: Nirmala Sitharaman

Currencies across the world were considered to be affected after the Fed, on September 21, raised the benchmark lending rate by 75 basis points to a range of 3-3.25 percent.

On the claims being made that a falling rupee aids exports, Sitharaman said "it may theoretically". "But under today's conditions, when there is a recession outside and demand not really being as adequate as it should be, even a fall in the rupee may or may not help our exports," she underlined.

Sitharaman's comments also comes ahead of the 38th meeting of the Monetary Policy Committee of the RBI, which will be held during September 28 – 30. The panel, according to experts, is expected to recommend another hike in the repo rate. Since May this year, the key lending rate has been raised by 140 basis points.

With PTI inputs
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