Lok Sabha Question No. 485 (UNSTARRED), answered on 2018-07-20
Subject: Appreciation of Rupee
Ministry: FINANCE
Asked by: ALOK SANJAR

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 485

TO BE ANSWERED ON JULY 20, 2018

## APPRECIATION OF RUPEE

† 485. SHRI ALOK SANJAR:

Will the Minister of FINANCE be pleased to state:

- (a) whether rupee has appreciated against US dollar in recent months;
- (b) if so, the details thereof along with the present price of rupee vis-à-vis dollar along with the reasons therefor;
- (c) the steps taken by the Government to strengthen rupee vis-à-vis dollar; and
- (d) the impact of rupee appreciation on various sectors of the economy?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PON. RADHAKRISHNAN)

- (a) & (b) The Indian rupee has depicted depreciating trends vis-à-vis US$ in the recent months. The value of the rupee vis-à-vis US$ since January 2018 is given in the following table.

| Exchange rate        | Exchange rate                                                             |
|----------------------|---------------------------------------------------------------------------|
| Month / Date         | Value of the Rupee vis-à-vis US dollar Rupees per dollar (Reference Rate) |
| January 2018         | 63.6400                                                                   |
| February 2018        | 64.3738                                                                   |
| March 2018           | 65.0213                                                                   |
| April 2018           | 65.6363                                                                   |
| May 2018             | 67.5394                                                                   |
| June 2018            | 67.7931                                                                   |
| As on July 17, 2018* | 68.2978                                                                   |

Source: Reserve Bank of India.   *FBIL Reference Rate

The  recent  episode  of  depreciation  of  the  rupee  via-a-vis  US$  can  be  mainly  ascribed  to  adverse  global developments viz increase in the prices of crude oil, escalation of protectionist sentiments in some countries; rising interest  rate  and  balance-sheet  normalisation  by  the  US  Fed  along  with  expansionary  fiscal  policy  in  the  United States.  These  factors,  among  some  others,  led  to  strengthening  of  US$  vis-à-vis  a  large  number  of  currencies, including the Indian rupee.

- (c) The RBI does not target any particular level of the exchange rate of Rupee. It intervenes in the currency market to  ensure  orderly  movement  and  curb  volatility  in  the  foreign  exchange  market,  and  remains  vigilant  to  market developments.    In  order  to  encourage  capital  inflows,  the  limits  for  foreign  portfolio  investments  in  Central Government debt have been raised in April 2018. Further, the level of foreign exchange reserves is adequate and enables the RBI in curbing the volatility in foreign exchange market and maintain orderly conditions.
- (d) Other things remaining the same, an appreciation of the Rupee via-a-vis other foreign currencies would tend to encourage imports and may reduce exports from different sectors of the economy.