Dismissing concerns over the depletion of India’s foreign exchange reserves as “overblown”, the Centre on Tuesday said the country has fairly large reserves to tide over the current situation.
Foreign exchange reserves have come down by $97 billion to $545 billion in the last year, official data showed. The foreign exchange reserves had hit an all-time high of $642 billion in September 2021.
“There has been depletion in reserves as foreign exchange inflows have come down and trade deficit is higher. I do not see it as a concern. India has fairly large reserves to tide over this situation,” Economic Affairs Secretary Ajay Seth said here.
Analysts have been critical of the Reserve Bank of India deploying the forex reserves in the past few weeks to defend the rupee, which has been depreciating due to global developments.
The latest to join the bandwagon is former Niti Aayog vice chairman Arvind Panagariya, who said keeping the rupee value artificially high by selling vast amounts of dollars from forex reserves while the currencies of India’s trading partners become cheaper, will make India’s goods less competitive and hurt economic growth.
The rupee hit its all-time high of 81.67 against the dollar on Monday before recovering on Tuesday to close at 81.58.
Currencies across the globe have been impacted after the US Federal reserve resorted to interest rate hikes to tame soaring inflation.
Finance Minister Nirmala Sitharaman had earlier said that RBI intervenes to check fluctuations and severe volatilities. However, it does not aim to fix an exchange rate for the rupee.
(Published 27 September 2022, 15:23 IST)
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