Business » Economy

Updated: August 9, 2012 00:43 IST

Rupee depreciation adding to inflationary pressures: FM

Special Correspondent
Comment (1)   ·   print   ·   T  T  
P. Chidambaram
P. Chidambaram

The government, on Wednesday, maintained that even as it had been taking a number of fiscal and administrative measures to contain the price spiral, it was the rupee depreciation that had been contributing to inflationary pressures.

“The decline in the exchange rate value of the rupee makes imports expensive. In situations where the higher cost is passed on to the consumers, it would contribute to inflationary pressures and general price rise,” Finance Minister P. Chidambaram told the Lok Sabha in a written reply.

Even as the rupee is now hovering around the 55.40-55.45 level against the dollar, after having touched a record low of 57.32 on June 22, and the WPI (wholesale price index) inflation also easing marginally to 7.25 per cent in June from 7.55 per cent in the previous month, Mr. Chidambaram said: “The government has taken a number of fiscal and administrative measures to check inflation, which resulted in moderation of inflation to around 7-7.5 per cent in the recent months.”

The decline in rupee value, the Finance Minister pointed out, was mainly on account of supply-demand imbalance in the domestic foreign exchange market.

“This is due to widening trade and current account deficits and slowdown in portfolio flows on account of escalation in euro crisis and strengthening of the dollar in the international market,” he said.

To stem the rupee slide, the government and the Reserve Bank of India (RBI) had taken a number of steps to facilitate capital inflows, boost exports and, thereby, augment the supply of foreign exchange into the country. Among the steps taken were a hike in the FII investment limit in debt securities, a higher interest rate ceiling for foreign currency NRI deposits and deregulation of interest rates on rupee-denominated NRI deposits.

In another written reply, Minister of State for Finance Namo Narain Meena said “The uncertainty in global financial markets due to recent developments in the eurozone had some impact on India.

“The government has been calibrating economic policies to mitigate the impact.”


Rupee fall, a problem from within?June 16, 2013

Rupee ends 35 paise down August 8, 2012

More In: Economy | Business

All because of free unchecked, unrestrained access to imported FMCG in multi brand retail outlets. Once govt allows FDI in multi-brand retail they would conspire to edge out Indian manufacturer's by forming MNC cartel or even sabotage Indian manufacturer's. Let us all organise Holi of imported FMCG. Drag out all FMCG from multi brand retail outlets & burn them to ashes. Be Indian buy Indian else leave your citizenship & get out of India.

from:  Shaleen Mathur
Posted on: Aug 9, 2012 at 15:48 IST
This article is closed for comments.
Please Email the Editor

Commodity prices

Take a look at the prices of various commodities in Chennai here»



Recent Article in Economy

FDI soars 63 per cent to USD 3.28 billion in February

Foreign direct investment (FDI) in India jumped about 63 per cent to USD 3.28 billion (about Rs. 20,820 crore) in February, 2015.... »