SRINAGAR: Finance Minister Nirmala Sitharaman has told the Lok Sabha that there has been no “devaluation” of the Indian Rupee (INR), which operates under a market-determined exchange rate system. The clarification comes in light of the recent depreciation of the INR against the US Dollar, with several factors contributing to the shift.
A response was placed on the table during question hour on her behalf that detailed the currency fluctuations.
According to the statement provided, the depreciation of the INR, alongside other major Asian currencies, is attributed to global economic uncertainties, particularly surrounding the results of the US elections. The US Dollar Index rose 6.5 per cent between October 1, 2024, and January 27, 2025, while the INR depreciated by 2.9 per cent, among the lowest of major Asian currencies during the same period. Other Asian currencies, including the South Korean Won, Indonesian Rupiah, and Malaysian Ringgit, saw sharper declines, depreciating by 8.1 per cent, 6.4 per cent, and 5.9 per cent, respectively.
The INR also faced pressure due to factors like narrowing interest rate differentials between the US and India, foreign portfolio investment (FPI) outflows, and a significant trade deficit in November 2024. Despite these challenges, the Finance Ministry emphasized that depreciation could have a positive impact on export competitiveness, although rising import costs could affect domestic inflation and the cost of living.
The response further assured that the government has no immediate plans to revisit the exchange rate policy framework, which has been consistent in maintaining a market-driven approach with no target or specific levels for the INR.
