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The government on Tuesday rejected concerns that the weakening of the Indian rupee against the US dollar reflects poor health of the economy, saying the country's macroeconomic fundamentals remain strong and economic activity continues to show resilience.
In a written reply to an unstarred question in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary said the exchange rate of the Indian rupee is influenced by a number of domestic and global factors, including movements in the Dollar Index, capital flows, interest rates, crude oil prices and the current account deficit. He stated, "Various domestic and global factors influence the exchange rate of the Indian Rupee (INR), including movements in the Dollar Index, trends in capital flows, interest rates, crude oil prices, and the current account deficit. At present, the macroeconomic fundamentals of the Indian economy remain strong" The minister said that despite these factors, the Indian economy continues to remain on a strong footing. He said real GDP has consistently grown at over 7 per cent during the last three years, supported by robust domestic demand, healthy corporate balance sheets and prudent fiscal management. The government also said that high-frequency indicators for the first quarter of 2026-27 point to sustained momentum in economic activity and domestic demand, indicating the continued resilience of the Indian economy. Responding to questions on measures being taken to address pressure on the rupee, the government said the value of the Indian rupee is market-determined, and there is no target or specific level or band for the currency. It said the Reserve Bank of India (RBI) regularly monitors the foreign exchange market and intervenes in situations of excess volatility. The RBI also keeps track of major global developments that could affect the USD-INR exchange rate, including monetary policy actions of major central banks, important global economic data releases, OPEC+ decisions, geopolitical developments, and movements in G-10 and emerging market economy currencies. The government said the RBI has taken several measures to boost foreign exchange inflows and ease depreciation pressure on the rupee. These include changes to the External Commercial Borrowings framework in February 2026, expansion of the Fully Accessible Route for government securities, higher investment limits for Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and other eligible overseas investors, a swap facility for fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, concessional forex swap facilities for eligible borrowings, and restoration of the export realisation period to nine months. On India's external sector, the government said external debt remains sustainable and prudently managed. As of end-March 2026, India's external debt stood at USD 762.8 billion, compared with USD 736.4 billion a year earlier. The debt service ratio declined from 6.6 at end-March 2025 to 5.8 at end-March 2026. The government added that as of June 12, 2026, India's foreign exchange reserves stood at USD 671.6 billion, providing an import cover of 10.3 months of goods and covering 88 per cent of the country's external debt outstanding as of end-March 2026. (ANI)
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