The Reserve Bank of India is keeping an eye on the rupee, Finance Minister Nirmala Sitharaman said on Friday amid a
ballooning trade gap which is posing new risks for the currency.
Sitharaman’s comments on a day when the Centre tightened exports of oil and imports of gold in an all-out effort to rein in the currency on a plunge.
“The government is constantly in touch with the RBI on the exchange rate,” Sitharaman told reporters in New Delhi on the sidelines of an event, adding that she is aware of the fact that a weaker currency leads to higher import costs.
Just at the beginning of this month, the rupee plunged to an all new low record of 79.1187 against the dollar. In line with other assets from emerging markets, the unit has been declining as global macroeconomic problems worsen.
Problems that have hurt the rupee include foreigners continuing to pull out funds from Indian equities, rising inflation and the spike in crude oil.
While, the dollar’s position against key peers was little altered, but it was on course to have its best week in four as investors evaluated the benefits of tighter Federal Reserve policy and the perils of a recession.
Furthermore, the government earlier today raised the duty on gold to curb imports and also imposed taxes on exports of petroleum products.
The oil prices began to rise in early trade after falling in the previous session as OPEC+ confirmed that it would stick to its planned oil output increases in August and investors expressed concern over the strength of the global economy.