Indian Rupee Depreciation

The Indian Rupee weakened significantly, falling by almost 0.6% or 49 paise to cross the 87 mark against the U.S. Dollar. This decline occurred amidst a downturn in emerging market currencies following increased tariffs imposed by the U.S. on Canada, Mexico, and China.

Current Exchange Rate Situation

• The Rupee crossed the 86 mark earlier and closed at 87.11, nearing 87.3 during intra-day trading.
• This depreciation is attributed to the strengthening of the U.S. Dollar, with the Dollar Index rising above 109, reaching 109.7 during the day.

Government's Stance and Economic Policy

• India does not use 'exchange rate policy' to boost trade; instead, it focuses on managing currency volatility.
• Economic Affairs Secretary Ajay Seth emphasized India's strategy of enhancing export competitiveness through quality rather than manipulating exchange rates.
• The government aims to handle global uncertainties and tariffs imposed by other nations by focusing on self-reliance and competitive advantages.

Key Points from Economic Affairs Secretary 

• The strengthening of the Dollar affects global currencies, impacting both emerging and developed markets.
• India's policy is to address currency volatility rather than achieving a specific exchange rate level.
• Rising Dollar results in costlier imports but could enhance export competitiveness.

India's Economic Strategy

• Focus on developing competitive advantages and reducing cost disadvantages through reforms and regulation adjustments.
• Emphasis on making India more self-reliant and resilient against global economic shifts.
• Budget initiatives are aimed at clearing regulatory bottlenecks and fostering growth.