India Has Fairly Large Forex Reserve To Tide Over Current Currency Market Situation, Says Ajay Seth The economic affairs secretary said that the concerns over the reserves were overblown
By Teena Jose
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Economic affairs secretary Ajay Seth, on Tuesday, dismissed the concerns over the decline in forex reserve by saying that India has fairly large reserve to tide over the current situation of currency markets. He also added that the concerns over the reserves were overblown.
"There has been a depletion as inflows have come down and the trade deficit is higher. I don't see this as a concern. India has fairly large reserves to tide over this situation," said Seth.
As per reports, India's foreign currency reserves have fallen to $546 billion on September 16, from a record high of $642 billion, declining for the seventh consecutive week. After hitting a record low at 81.67 against the dollar on Monday, the rupee recovered on Tuesday and closed at 81.58 against the greenback.
Commenting on the same, finance minister Nirmala Sitharaman on Monday, said in a statement that, "Due to the strength of our microeconomic fundamentals, rupee is holding out well. The rate of fall of other currencies vis-à-vis the US dollar has been sharply much more than the India rupee."
"Now what is our strategy? The interventions, if at all, the RBI makes using the Indian reserves, which I think $75 billion has been used, essentially to stop fluctuations, the severe volatilities. The RBI is not aiming to fix a rate, the exchange rate and the government doesn't believe in it," said Sitharaman.
US Federal Reserve last week raised the benchmark lending rate by 75 basis points to a range of 3 to 3.25 per cent that impacted currencies across the world. Ajay Seth said that the government intends to hold on to a fiscal deficit target of 6.4 per cent GDP for the current fiscal ending March 2023. He added, "So, we don't intend to, I will say that path will be adhered to, there is no need to overshoot, and we are well into that aspect."
