Rupee strengthened against all major currencies other than dollar: CEA

At a time when the Indian rupee has touched a historic low breaching the psychological 80 mark, Chief Economic Advisor (CEA) V Anantha Nageswaran said that the rupee has declined only against the dollar and has strengthened against all the other major currencies of the world.

He added that unlike earlier crises, the depreciation of the rupee against the US dollar was lower than other major global currencies such as the Swiss Franc, the Euro, the British pound and the Japanese yen. He said that with crude oil prices coming down and the onset of monsoon, inflation is expected to moderate.

“Even though it has depreciated by 7 per cent against the dollar, I would rather urge you to look at it as a dollar appreciation and not rupee depreciation. Because rupee is not the only currency that has depreciated,” Nageswaran said addressing the 186th Annual General Meeting of the Madras Chamber of Commerce and Industry (MCCI). “This time the rupee has declined only against the dollar but has strengthened against other major currencies,” he added.

He cited the monetary tightening by the US as a major reason for the depreciation in rupee and other currencies against the US dollar. “I think there is much to be grateful about and less to be concerned about the Indian economy. The current macro situation is that this week the US Federal Reserve is meeting again and there is expectation that they would raise interest rates. Interest rates have been rising in many countries. While many of us are anxious about RBI raising interest rates, India’s interest rate increase is somewhat milder and smaller compared to other nations,” he added. The Fed is expected to raise its benchmark interest rate by at least 75 basis points at its next monetary policymaking meeting on July 26-27

Nageswaran highlighted that the most anti-inflation countries like Germany are experiencing higher inflation rates compared to India. “Inflation intolerance creeping up in India is good. Average inflation rate in the last 70 years was 7 per cent. We are much more inflation sensitive. If we can cap the current peak in inflation to 8 per cent, which we have seen a couple of months ago, which is now down to 7 per cent, then we would have done very well in the global context,” he said. He added, “With monsoon happening, the country may have already seen the peak of inflation, which means RBI may not have to raise interest rates as much as we have feared.”

MCCI said in a statement that T R Kesavan, group president (Corporate Relations & Alliances), TAFE was elected as president and Ramkumar Shankar, managing director, Chemplast Sanmar as the vice president in the 186th AGM of the industry body.