Lok Sabha Question No. 3120 (UNSTARRED), answered on 2015-08-07
Subject: Fall of Indian Rupee
Ministry: FINANCE
Asked by: MIDHUN REDDY, S.P. MUDDAHANUMEGOWDA, DODDAALAHALLI KEMPEGOWDA SURESH

- (a)  whether  the  rupee  has  witnessed  continuous  depreciation  against  the  US  dollar during the current fiscal year;
- (b) if so, the details thereof and the reasons therefor;
- (c)  extent  to  which  the  said  fall  in  rupee  is  adversely  affecting  various  sectors  of  the economy  including  trade  and  commerce,  oil  prices  and  Government  subsidy  on Kerosene and cooking gas; and
- (d) the steps taken by the Government to prevent the fall of rupee including issuing NRI Bonds and Gold Bonds?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI JAYANT SINHA)

- (a)  &  (b)  The  exchange  rate  of  the  rupee  during  last  four  months  of  2015-16,  month wise, and its appreciation /depreciation is given in the table below:

Table: Value of Rupee per US dollar and its Appreciation / Depreciation

| Month      |   Rs. per US dollar* | Appreciation (+) / Depreciation (-) of Rupee over the previous month ( in per cent)   |
|------------|----------------------|---------------------------------------------------------------------------------------|
| April 2015 |                62.75 | (-) 0.5                                                                               |
| May 2015   |                63.80 | (-) 1.6                                                                               |
| June 2015  |                63.86 | (-) 0.1                                                                               |
| July 2015  |                63.63 | (+) 0.4                                                                               |

* Monthly average of RBI's  Reference Rate.  Source: Reserve Bank of India

During 2015-16, exchange rate of Indian rupee against US dollar has remained in the range of  Rs. 62.7- 63.9 per US dollar. The variation in the value of rupee against US dollar in  the  recent  months has been due to supply-demand imbalance in the foreign exchange market and the general appreciation of US dollar globally.

- (c)  The  impact  of  exchange  rate  depreciation  on  different  sectors  of  Indian  economy depends on a number of factors like elasticity of exports and imports, relative prices of domestic  and  global  products,  etc.    The  softening  of  international  commodity  prices, particularly crude oil prices, notwithstanding the modest  depreciation, will  have favourable  impact  on  trade  and  current  account  balances  as  well  as  macroeconomic stability.  This  may  also  reduce  the  Government  subsidy  outgo  on,  among  others, kerosene and cooking gas.
- (d)  To  limit  the  import  of  gold  and  to  bring  the  stocks  of  gold  in  the  mainstream economy, Government has announced the monetization of gold scheme in the Budget 2015-16,  which  will  replace  both  the  present  Gold  Deposit  and  Gold  Metal  Loan Schemes. The Government and the RBI are closely monitoring the emerging external

position  including  exchange  rate  of  the  rupee  and  on  an  on-going  basis  calibrating policies or regulations to support robust macroeconomic outcome.

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