FM says overvalued currencies erode nation’s export competitiveness

FM says overvalued currencies erode nation’s export competitiveness

At a time when the Reserve Bank of India's (RBI) has been intensifying its interventions to limit a sharp slide in the rupee, Finance Minister Nirmala Sitharaman points out that overvalued currencies erode export competitiveness.

Responding to a discussion on the Budget for 2025-26 in the Rajya Sabha, Sitharaman on February 13 said “we believe overvalued currencies erode national competitiveness as exports become expensive.”

The Indian rupee has seen record lows in the past few days due to foreign fund outflows and rising dollar demand from oil importers, amid weak appetite in global markets.

Recently, RBI Governor Sanjay Malhotra attributed rupee's depreciation mostly to tariff announcements by US President Donald Trump and global uncertainties.

During her reply, Sitharaman noted that currencies of several advanced and emerging economies had also faced significant depreciation. “G10 currencies depreciated by more than 5.5 percent during October 2021 to January 2025. Major Asian currencies, too, weakened during this period. I want to allay concerns on account of rupee fluctuations. The government and the RBI will continue to exercise necessary vigil,” she said.

Inflation

Highlighting domestic economic developments, Sitharaman said adverse weather conditions had affected growth in some quarters of FY25. "Most departments could not spend their capital expenditure in time due to the Lok Sabha elections," she said, adding that inflation was stabilising.

India’s GDP growth slumped to 5.4 percent in the second quarter of FY25.

“The Consumer Price Index (CPI) for January 2025 is now close to the lower end of the RBI’s inflation target band. A steep correction in potato, onion, and tomato prices, along with a decline in pulses inflation supported by tariff measures, has contributed to this softening,” Sitharaman said.

India’s inflation dipped to 4.31 percent for the first time in five months in January compared with 5.22 percent in the previous month, as food inflation eased further in the month, according to data released by the government on February 12.

She assured the House that supply chain disruptions are being actively managed by a group of ministers. "We are closely monitoring the situation and taking necessary measures to ensure stability," she said.