Department of Economic Affairs (DEA) secretary Ajay Seth, speaking on the recent fall in the rupee, said that the concerns regarding the depletion of forex reserves were "overblown".
"Yes, there has been depletion as inflows have come down, and the trade deficit is higher, but I don't see it as a concern. India has fairly large reserves to tide over the situation," Seth said. "When we were sitting on $600 billion of reserves, the idea was, do we have too much of reserves."
The rupee gained by 13 paise against the US dollar on Tuesday but remained above 81 versus the dollar. The domestic currency rose to 81.49 against the dollar, a day after hitting a record closing low of 81.62.
The rupee has breached the crucial 81 mark against the US dollar as the greenback climbed to a 20-year high, backed by Federal Reserve's 75 basis point rate hike.
Finance secretary TV Somanathan also said that the fall in the currency was an international phenomenon and not peculiar to rupee. Asserting that the fall is not a worry, he said, "It's a dollar rise, not a rupee fall."
Meanwhile, the DEA secretary said the government aims to stay within the fiscal limits with respect to the borrowing calendar. The Reserve Bank of India issues a borrowing calendar or a market borrowing plan basis the government's budget. The RBI releases an indicative calendar for the issuance of government-dated securities. RBI prepares the calendar in consultation with the government.
Seth said that the borrowing calendar for the second half of the current fiscal should be out by October 1. He also said the government is likely to announce a framework for green bonds next month.
Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 5,101.30 crore, as per exchange data. Meanwhile, the country's forex reserves declined $5.219 billion to $545.652 billion for the week ended September 16.
Reuters reported that the Reserve Bank of India likely sold dollars to contain the decline. The intervention by the RBI was confirmed to Reuters by four traders. "The reason rupee is managing to cling on to 81.50 is the RBI," a private bank trader said. "But the supply of dollars by the RBI is getting easily absorbed."
First Published: Sept 27, 2022 1:31 PM IST
