There is no concern over the falling value of rupee, as against the US dollar, as such events do occur in times of unabated outflow of foreign funds, finance secretary Tuhin Kanta Pandey told reporters on Monday.
“The Reserve Bank of India (RBI) is managing the volatility of the rupee…but it’s a free-float system,” Pandey said. The rupee on Monday depreciated 67 paise to hit record-low of 87.29-a-dollar after Trump Tariffs on Canada, Mexico, and China triggered fears of a broad trade war.
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Pandey said that the depreciation of the Indian currency will certainly have an impact on imports, which can turn expensive and stoke inflation, but added that exports will become more attractive.
The Economic Survey 2024-25 highlighted that in the first nine months of FY25 (up to January 6), the rupee has depreciated a modest 2.9% against the dollar. “One of the primary factors behind the rupee depreciation during 2024 has been the broad-based strengthening of the USD amidst geopolitical tensions in the Middle East and uncertainty surrounding the US election.”
The value of rupee is market-determined, with no target or specific level or band, the survey said, adding that various domestic and global factors influence the exchange rate of rupee, such as the movement of the Dollar Index, trends in capital flows, level of interest rates, movement in crude prices, current account deficit, etc.
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Meanwhile, on GST, the finance secretary said that enough experience has been gained regarding implementation of GST and now the rates need to be rationalised in consultation with states.
“Rationalisation is needed. But how exactly it will be able to be translated and what are the numbers we will be able to arrive at…which are the rates we will be able to arrive at, that further exercise will be done by GoM (Group of Ministers)” Pandey said, at a FICCI-event, earlier on Monday.
The GST Council’s six-member Group of Ministers (GoM) panel has recommended changes in tax rates for 148 items, which include readymade garments, leather products, packaged water, tobacco products, aerated drinks,
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