Sending out a word of assurance, Union Minister Arun Jaitley said that India’s foreign exchange reserves are comfortable by global standards and sufficient to mitigate any undue volatility in the foreign exchange market.

His remark has come at a time when the rupee slipped to all time low of 70.09 to a dollar during intra-day trade on Tuesday. Jaitley assured that the country’s current exchange rate market is being monitored to address any unexpected situation. 

“The developments are being monitored closely to address any situation that may arise in the context of the unsettled international environment,” Jaitley said in a series of tweets on Wednesday. 

The Minister, who is recovering from renal surgery that took place in May, is expected to resume office in the Finance Ministry soon. In his absence, Railway Minister Piyush Goyal has been given charge of the Finance Ministry.

Jaitley said that India’s foreign exchange reserves are comfortable by global standards and sufficient to mitigate any undue volatility in the foreign exchange market. According to RBI’s weekly statistics data, forex reserves stood at $402.70 billion in August. Though, it fell by $1.4 billion between July 27 and August 3 and there appears to be further depletion, reserves are still above $400 billion, which gives some comfort.

Turkey crisis

He said that recent developments relating to Turkey have generated global risk aversion towards emerging market currencies and strengthened the dollar. However, India’s macro fundamentals remain resilient and strong, Jaitley said. 

Recently, IMF said that India will be an engine of growth for the global economy for the next few decades and it could play the role China did for the world economy. It also mentioned that India now contributes, in purchasing power parity measures, 15 per cent of the growth in the global economy, which is substantial.

The rupee has been one of the worst performers among currencies of emerging market economies. It has lost over 9.49 per cent of its value this year so far against the grim backdrop of India’s ballooning fiscal deficit and surging crude prices. August saw the largest devaluation of the rupee against the dollar in the past year. A rebound in oil prices, FII outflows and concerns over currrent account deficit are factors weighing on the rupee.

However, traders said that heavy intervention by the RBI predominantly checked the rupee’s sharp depreciation and the local currency staged a spirited recovery from its life-time low. A relief rally in local equities amid a recovery in global markets, including the Turkish lira, further supported the forex sentiment. And, the rupee on Tuesday finally settled at 69.89, showing a modest gain of 4 paise. The forex market is closed on Wednesday on account of Independence Day.

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