Lok Sabha Question No. 1990 (UNSTARRED), answered on 2022-12-19
Subject: Strengthening of Rupee
Ministry: FINANCE
Asked by: K. Muraleedharan, Nusrat Jahan Ruhi

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 1990

TO BE ANSWERED ON DECEMBER 19, 2022

## STRENGTHENING OF RUPEE

1990. Shri K. Muraleedharan : Ms. Nussrat Jahan :

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  value  of  rupee  against  the  US  dollar  has  been  continuously decreasing during the last few months and if so, the details thereof and the reasons therefor;
- (b)  whether  the  Government  has  taken  any  steps  to  increase  the  value  of  Rupee against the Dollar; (c) if so, the details thereof and if not, the reasons therefor; (d) whether Government has formulated any long-term plans to strengthen the value of Rupee in the international markets and if so, the details thereof; and (e)  whether  the  Government  has  formed  a  committee  to  control  the  plummeting
- value of Indian

Rupee and if so, the details thereof

## ANSWER

## THE MINISTER OF STATE FOR FINANCE (SHRI PANKAJ CHAUDHARY)

- (a): The value of the Indian Rupee is market-determined. As global spillovers from geo-political  tensions  and  aggressive  monetary  policy  tightening  across  the  world intensified alongside a surge in crude oil prices, the US dollar strengthened by 7.8% in  the  financial  year  (till  November  30,  2022).    While  the  Rupee  has  witnessed  a depreciation  of  6.9%  in  the  current  financial  year  till  November  30,  2022,  it  has performed better than most Asian peer currencies, including the Chinese Renminbi (10.6%),  Indonesian  Rupiah  (8.7%),  Philippine  Peso  (8.5%),  South  Korean  Won (8.1%), Taiwanese Dollar (7.3%) etc during the financial year.

(b) to (e):  The Reserve Bank of India (RBI) closely monitors the foreign exchange markets  and  intervenes  only  to  maintain  orderly  market  conditions  by  containing excessive  volatility  in  the  exchange  rate,  without  reference  to  any  pre-determined target level or band. During the financial year, the RBI's operations have resulted in net sales of US$33.42 billion till September 2022 (settlement basis).

Further, the RBI had announced various measures in the recent period to diversify and  expand  the  sources  of  forex  funding  to  mitigate  exchange  rate  volatility  and dampen global spillovers Some of these measures are:

-  Incremental  Foreign  Currency  Non-Resident  (Bank)  [FCNR(B)]  and  NonResident (External) Rupee (NRE) deposit liabilities were exempted from the maintenance of cash reserve ratio (CRR) and statutory liquidity ratio (SLR) for deposits mobilized up to November 4, 2022.
-  Fresh FCNR(B) and NRE deposits were exempted from the extant regulation on interest rates (i.e. interest rates shall not be higher than those offered by the banks on comparable domestic rupee term deposits) till October 31, 2022.
-  The regulatory regime  relating  to  foreign  portfolio  investments  in  debt  flows has been revised to encourage foreign investment in Indian debt instruments.
-  The  external  commercial  borrowing  limit  (under  automatic  route)  has  been raised to US$1.5 bn and the all-in-cost ceiling has been raised by 100 basis points in select cases up to December 31, 2022.
-  Authorized  dealer  Category  1  Banks  can  utilize  overseas  foreign  currency borrowing  for lending in foreign currency  to end  use  prescriptions as applicable to external commercial borrowings.
-  In  order  to  promote  the  growth  of  exports  from  India  and  to  support  the increasing interest of the global trading community in the Indian Rupee, RBI has  put  in  place  an  additional  arrangement  for  invoicing,  payment,  and settlement of exports/imports in INR on July 11, 2022.

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