Attributing the slide in rupee value to various domestic and global factors, Union Finance Minister Pranab Mukherjee on Sunday said the Reserve Bank was taking steps to arrest the currency’s depreciation.
“There are a lot of reasons for this (depreciation). There is demand and supply in the market. In the US, there is surplus investment. It used to be a safe haven,” he told reporters.
“Europe used to be an important destination for exports, but demand there is uncertain,” he said, adding global recovery was “poor and fragile” while oil prices were on rise.
India’s fiscal deficit too is widening and is estimated to have touched 5.9 per cent of GDP in 2011-12.
“Because of the cumulative effect of all these reasons the price of rupee is falling down,” he added.
Mr. Mukherjee said the RBI was taking steps to check the depreciation in the Indian currency from time to time.
RBI recently indicated that it may sell dollars directly to oil companies to ease pressure on the currency. Besides, it has already taken steps to curb speculation in the forex market and increase the inflow of foreign currency.
Since early March, rupee has lost about 13 per cent against the dollar driven by a combination of deteriorating global risk sentiment and weak domestic fundamentals.
The rupee had hit an all-time high of 56.38 on Thursday.
On Friday, the rupee gained 27 paise to close at 55.37 after RBI intervened on currency breaching the 56—level in early trade.
Keywords: Union Finance Minister Pranab Mukherjee, Rupee decline, Forex markets, Reserve Bank of India
Mr.Finance minister why do not you think to get black money back into the system, why do not you recommend to pass a strong lok-pal bill in parliament, you always rant that because of depreciation in the value of Rupee we have to increase the price.I ask you one question how much will you increase prices of petroleum product to cover the deficit,and till how long. it is quite shameful that the price of petrol is less in our neighbouring country still they are poor than us. what do you think, is hiking the petrol prices, diesel prices and LPG prices (which is the necessities of a common man) and taking austerity measure a panacea, that will help you out. think beyond this Mr. Finance minister, cut the foreign trips of leaders and officials for example- our LOKSABHA speaker srimati Meera kumar has gone to 29 foreign trips within her less than 3years tenure. Explore the option to bring back FDI into country because FDI can help to get rid of deficit. do for the shake of country.
Some economists have argued that the Rupee was overvalued before its current fall. That means neither the Union government nor the Reserve Bank of India could have done anything to arrest fall of Rupee. This depreciation in 2012 also means that in the long term, with the inflation rate expected to remain around 8 to 10 percent during next few years, similar adjustment will take place from time to time, unless we are able to reduce current account deficit (CAD). Let us face the truth: CAD cannot be reduced without some restrictions on imports or without a big jump in exports. Exports may go up on account of our competitive prices as a result of depreciated Rupee. But situation would continue to remain grim till we are able to reduce our oil imports. But how many political parties are ready to tell this bitter truth to the common man?
The reason for Re depreciation is due to many factors.The illegal wealth created by the locals and politicians repatriate this to foreign by hawala route which RBI cannot control.Over the last few quarters lot of scams were noticed.This amount is also exported.Of the corporates overseas funds raised many a/cs are not plowed back in India.The govt should check the practice of Indian companies investing in De Listed US companies. This is in fact a permitted exchange siphoning black money.
Everything is ok but you should not control the agricultural commodities so that the farmers should not be effected irrespective to US dollar increase.The other thing is the increase of petrol prices should make it round figure (that is Rs 8.03 and make it Rs 8.00) so that the petrol pumps will not loot the customers.
It is high time they should play safe game in their own interest and in
the interest of the Nation to Bring in the Black money from abroad and
easily solve all the problems and also save the Nation from cooked up
disrepute.Retrieval Black money is the ultimate solution for all
economic and social ills.
FM, please stop throwing dust in people's eyes. The problems are more structural than just RBI's tinkering.
It is high time that the Honble Finance minister takes bold steps to bring back the money stashed away from our country to Tax havens in other countries. This will definitely strenthen the Rupee and save the common man from such difficult situations they are pushed into on account of petrol or diesel or LPG hike. Non essential items like Coke, Pepsi and cosmetics should be barred from repatriating their profits in dollars or there should be a ceiling in such a way that they plough back the money into the Indian system. These measures will definitely make the rupee stronger than any other currency. Govt should not depend on International financial institutions investing in our stock market as it is one of the worst speculative market, one isn't sure as to when there will be a large scale flight of capital invested.
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