Lok Sabha Question No. 618 (UNSTARRED), answered on 2018-07-20
Subject: Value of Rupee against US Dollar
Ministry: FINANCE
Asked by: RAJEEV SHANKARRAO SATAV, JYOTIRADITYA MADHAVRAO SCINDIA, ASADUDDIN OWAISI, RAM KUMAR SHARMA KUSHWAHA, DHANANJAY BHIMRAO MAHADIK, SUPRIYA SADANAND SULE, SUSHMITA DEV, ANTO  ANTONY, VIJAYSINH MOHITE PATIL, P.R. SUNDARAM, HEENA VIJAYKUMAR GAVIT, JAYAKUMAR JAYAVARDHAN, SHIVKUMAR CHANABASAPPA UDASI

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

## LOK SABHA

## UNSTARRED QUESTION NO. 618 TO BE ANSWERED ON JULY 20, 2018

## VALUE OF RUPEE AGAINST US DOLLAR

618. SHRI SATAV RAJEEV:  SHRI JYOTIRADITYA M. SCINDIA:  SHRI ASADUDDIN OWAISI: SHRI RAM  KUMAR  SHARMA:  SHRI DHANANJAY  MAHADIK:  SHRIMATI  SUPRIYA  SULE: KUMARI  SUSHMITA  DEV:  SHRI ANTO  ANTONY:  SHRI MOHITE  PATIL  VIJAYSINH SHANKARRAO:  SHRI P.R. SUNDARAM:  DR.  HEENA VIJAYKUMAR GAVIT: DR.  J. JAYAVARDHAN:  SHRI SHIVKUMAR UDASI:

Will the Minister of FINANCE be pleased to state:

- (a) the value of Indian rupee against Pound, Dollar and Euro during each of the last twelve months along with reasons for difference/variations, currency-wise;
- (b) whether there has been a continuous fall in the value of rupee and the value of rupee collapsed to a record low of Rs. 69.09 against U.S. Dollar recently, if so, the details thereof including average value of Indian rupee against the U.S. dollar during the last ten years along with the resultant depletion in the Foreign Exchange Reserves;
- (c) the factors responsible for a sharp fall in the value of rupee against the dollar and its effect on the economy including imports, Current Account Deficit along with the extent to which the rising oil prices, trade war between China, United States (US) and India have contributed to this fall;
- (d) whether increase in imports have mainly caused the fall in the value of rupee, if so, the reaction of the Government thereto along with the details of the articles imported and estimated to be imported more during the year 2017-18 and 2018-19 respectively; and
- (e) whether the RBI/Government has taken corrective steps to protect the value of rupee against US dollar and its effect on the economy including imports, if so, the details thereof?

## ANSWER

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

(a) to (c) The value of Indian rupee against British pound, US dollar and Euro during the period from July 2017 to June 2018 is given in Table 1.

Table 1: Value of Indian Rupee against Selected Currencies (Rupees per Unit of Foreign currency)

| Month   |   British Pound |   US Dollar |    Euro |
|---------|-----------------|-------------|---------|
| Jul-17  |         83.7544 |     64.4559 | 74.2036 |
| Aug-17  |         83.0433 |     63.9684 | 75.5956 |
| Sep-17  |         85.7254 |     64.4409 | 76.7891 |
| Oct-17  |         85.9151 |     65.0813 | 76.48   |
| Nov-17  |         85.7741 |     64.8626 | 76.1211 |
| Dec-17  |         86.1115 |     64.2423 | 75.9975 |
| Jan-18  |         87.65   |     63.64   | 77.45   |
| Feb-18  |         90.0763 |     64.3738 | 79.5625 |
| Mar-18  |         90.8382 |     65.0213 | 80.2499 |
| Apr-18  |         92.5691 |     65.6363 | 80.6612 |
| May-18  |         90.9732 |     67.5394 | 79.8248 |
| Jun-18  |         90.0672 |     67.7931 | 79.1619 |

Note: Based on RBI Reference Rate.    Source: Reserve Bank of India.

The value of Rupee vis-à-vis the US dollar remained in a relatively narrow range of Rs. 63.97 per US$ to Rs. 65.08 per US$ between July 2017 and December 2017. It appreciated somewhat in January 2018, but then depreciated till June 2018. The major reasons for depreciation of the rupee vis-à-vis the US$, inter-alia, include: the recent global developments viz increase in the prices of crude oil, escalation of protectionist sentiments in some countries; rising interest rate and balance-sheet normalization by the US Fed, along with expansionary  fiscal  policy  in  the  United  States.  The  variations  in  the  exchange  rate  (Reference  rate)  of  the  Rupee  vis-à-vis  other currencies (Euro and British Pound) basically reflect the spot cross country rates of Euro/US$ and British Pound/US$, and are arrived at by crossing the USD/INR Reference rate with the ruling Euro/USD and British Pound/USD rates, respectively.

The value of Indian Rupee vis-à-vis US$ has not fallen continuously. However, there are variations during the intermediate periods. It fell  to  an  intra-day  low  of  Rs.  69.09  per  US$  on  28 June 2018.The exchange rate of Indian rupee vis-à-vis US dollar and level of country's foreign exchange reserves, in last ten years are given in Table 2:

Table 2: The exchange rate of Indian rupee vis-à-vis US dollar and Foreign Exchange Reserves

| Financial Year        |   Exchange rate INR /US$ (Average for the year) | Foreign Exchange Reserves (End-financial year) US $ million   |
|-----------------------|-------------------------------------------------|---------------------------------------------------------------|
| 2008-09               |                                         45.9933 | 251985                                                        |
| 2009-10               |                                         47.4433 | 279057                                                        |
| 2010-11               |                                         45.5626 | 304818                                                        |
| 2011-12               |                                         47.9229 | 294398                                                        |
| 2012-13               |                                         54.4099 | 292046                                                        |
| 2013-14               |                                         60.5019 | 304223                                                        |
| 2014-15               |                                         61.1436 | 341638                                                        |
| 2015-16               |                                         65.4685 | 360176                                                        |
| 2016-17               |                                         67.072  | 369955                                                        |
| 2017-18               |                                         64.4474 | 424545                                                        |
| 2018-19 (April- June) |                                         66.9896 | 405810 (As on 6 th July 2018                                  |

Source: Reserve Bank of India.

(d) As stated in part (a) to (c) of the reply, the variations in the exchange rate of the rupee vis-à-vis other currencies is the result of many factors and significantly higher level of imports as compared to exports along with current account deficit could be among them. The level of imports of major commodities during 2017-18 and April-May 2018 is given in Table 3:

Table 3: Import of Principal Commodities Groups                      (Value in US$ million)

Source : Department of Commerce, Ministry of Commerce and Industry.  P: Provisional.

| Commodity                                                                                                          | 2017-18   | 2018-19 (Apr-May) (P)   |
|--------------------------------------------------------------------------------------------------------------------|-----------|-------------------------|
| 1. Plantation                                                                                                      | 1,039     | 173                     |
| 2. Agri & Allied Products                                                                                          | 22,223    | 3,167                   |
| 3. Marine Products                                                                                                 | 123       | 25                      |
| 4. Ores & Minerals                                                                                                 | 31,740    | 5,850                   |
| 5. Leather & Leather Manufactures                                                                                  | 1,057     | 172                     |
| 6. Gems & Jewellery                                                                                                | 74,668    | 11,714                  |
| 7. Sports Goods                                                                                                    | 292       | 52                      |
| 8. Chemicals & Related Products                                                                                    | 40,393    | 8,057                   |
| 9. Plastic & Rubber Articles                                                                                       | 17,038    | 3,063                   |
| 10. Articles Of Stone, Plaster, Cement, Asbestos, Mica Or Similar Materials; Ceramic Products; Glass And Glassware | 2,715     | 434                     |
| 11. Paper & Related Products                                                                                       | 8,277     | 1,379                   |
| 12. Base Metals                                                                                                    | 27,429    | 5,153                   |
| 13. Optical, Medical & Surgical Instruments                                                                        | 5,340     | 932                     |
| 14. Electoronics Items                                                                                             | 51,541    | 8,823                   |
| 15. Machinery                                                                                                      | 39,149    | 7,495                   |
| 16. Office Equipments                                                                                              | 47        | 7                       |
| 17. Transport Equipments                                                                                           | 19,175    | 2,057                   |
| 18. Project Goods                                                                                                  | 2,078     | 429                     |
| 19. Textiles & Allied Products                                                                                     | 6,402     | 1,120                   |
| 20. Petroleum Crude & Products                                                                                     | 108,659   | 21,937                  |
| 21. Others                                                                                                         | 6,193     | 1,023                   |
| Total Imports                                                                                                      | 465,578   | 83,063                  |

(e) The value of the Indian rupee against other currencies is market determined and the RBI conducts its foreign exchange market operations for orderly movement in the exchange rate and contain volatility. The Government as well as the RBI closely monitor the external  developments  on  an  ongoing  basis  to  support  robust  macroeconomic  outcome.  The  improvement  in  the  current  account balance is achieved by promoting exports and /or curtailing imports. To encourage capital inflows, the investment limits for foreign portfolio investors were eased in April, 2018.