Finance Minister Nirmala Sitharaman has not given much importance to the 8 percent decline in the Indian currency against the US Dollar this year and has said that the rupee has not weakened but the dollar has strengthened. Speaking to reporters here on Saturday after attending the annual meeting of the International Monetary Fund (IMF) and the World Bank, Sitharaman said the fundamentals of the Indian economy are strong. He said that despite the strong US dollar, the Indian currency has remained stable.
What did Finance Minister Nirmala Sitharaman say?
In response to a question about the depreciation of the rupee, the finance minister said that first of all, I would not see it as the rupee slipping but I would like to say that the rupee has strengthened. The dollar continues to strengthen. The rupee closed at 82.35 against the dollar on Friday. India’s foreign exchange reserves stood at $532.87 billion as of October 7, 2022, up from $642.45 billion a year earlier. Sitharaman said that the main reason for the decline in India’s foreign exchange reserves is the change in valuation due to the strengthening of the US dollar. The Reserve Bank of India also agrees with this.
Weakness is also seen in foreign currency
Just two months ago, around August 10, the price of a pound was $1.22, which dropped to $1.16 a pound on September 10. Today i.e. October 15 it has gone down to $1.12 per pound. The euro has also fallen from $1.03 per euro in two months to $0.97 today. India is benefiting from this and the Indian Rupee is strengthening against the Pound and the Euro. One of the reasons behind this is that India is doing well at the moment and experts say there is no chance of a recession in India.
The rupee has strengthened against the pound
Currently, the price of 1 pound is Rs 92.07, which was Rs 95.91 per pound two months ago on August 5. In one month, the Indian rupee has strengthened by 3.84 rupees against the pound. Two months ago, one Euro was worth Rs. 82.17 which today reduced to Rs. 80.12 per euro.
How the euro reached its worst ever level
Due to the increase in crude oil prices in Europe and almost the rest of the world, many countries in Europe are facing inflation. In the energy sector in particular, the situation has worsened with Russia’s recent decision to completely shut down the Nord Stream pipeline. This order increased the price of energy sources like gas and oil in Europe, which played an important role in devaluing the EURO. Currently, the value of the dollar against the euro is at its lowest level in the last 20 years. If this decline continues, soon the value of one euro will be equal to one dollar.
On 15 July 2002, the euro was equal to the dollar
The European currency reached its all-time high of $1.18 per euro shortly after its launch on 1 January 1999 but it did not last long. The euro fell to less than $1 in February 2000, and by October it had reached a record low of 82.30 cents. Then gradually the situation improved and on 15 July 2002 the euro was equal to one dollar. Since then the euro has not seen the decline that it does today.
Why is the pound so bad?
There is an atmosphere of uncertainty at the moment, from UK politics to the UK economy. Elections have been held recently. A new PM will be created. It is said that if you want to be strong in the market, you have to eliminate uncertainty. On the other hand, Britain’s exit from the European Union has been very costly. Due to which British traders are suffering. They will have to pay more tax than before. Previously, when Britain was part of the EU, there were no taxes to be paid to trade with any country within the European Union. Their economy used to benefit a lot from this which has now stopped. Inflation is also at its peak at this time. People are getting less employment. This problem is not only in Britain but also in other neighboring countries.
The US dollar is the global currency
As we know US dollar is global currency. The US dollar alone accounts for 64% of foreign exchange reserves held by central banks around the world. Most countries of the world trade in dollars. All this strengthens the US dollar. Currently, America is the country with the largest economy in the world. He has a net worth of $25,350 billion.