The minister of State for finance, Pankaj Chaudhary, in governments written responses in the Rajya Sabha on Tuesday said that there is no adverse impact of recent deprecation of the INR on the long-term economic stability of the Indian economy. The depreciation of currency is likely to enhance the export competitiveness, which in turn impacts the economy positively. On the other hand, depreciation may raise the prices of imported goods. The overall impact of exchange rate depreciation on domestic prices depends on the extent of the pass-through of international commodity prices to the domestic market. The industries reliant on imported inputs may face cost pressures. However, besides exchange rate movements, exports and imports are determined by several other factors. For instance, global value chain integration necessities imports of intermediate goods for production and exports, and international prices of imported goods etc.
Meanwhile, RBI was the net seller of over $36 billion between June and December to support the Indian Rupee, the response showed. He added that the value of the Indian Rupee (INR) is market-determined, with no target or specific level or band. The Reserve Bank of India (RBI) monitors key developments across the globe which may have an impact on USD-INR exchange rate. Among others, it includes monetary policy actions of the major Central Banks, major economic data releases across the globe and their impacts thereof, OPEC+ meeting decisions, tracking, and analysing geo-political events, daily movements in G-10 and EME currencies etc. RBI regulates the foreign exchange market with a view to ensure its orderly functioning and development and intervenes only to curb undue volatility in the INR.
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