India not defending Rupee, CEA says fundamentals are strong


Chief economic adviser V Anantha Nageswaran on Tuesday said India is not defending the rupee, and that the Reserve Bank of India is only taking necessary steps to ensure that the rupee‘s movement is gradual and in line with market trends.

“India is not defending the rupee… I don’t think Indian fundamentals are such that we need to defend the rupee. The rupee can take care of itself,” Nageswaran said at Hero Mindmine Summit here.

The Indian rupee had touched an all-time low of 80.15 against the US dollar in August. It is currently hovering at 79.25 against the American currency.

Nageswaran said the rupee is being managed in a manner that reflects the fundamentals of the economy. “The RBI is making sure that whatever direction, the rupee is moving in line with the market trends, is just gradual, and doesn’t impose burden either on the importers or the exporters,” he said.

Speaking on the sidelines of the two-day annual event, the chief economic advisor (CEA) said food inflation in the country could be an outcome of misreading sowing data by market forces. He said there is scope for month on month spike in inflation to moderate.

Retail inflation based on the consumer price index (CPI) rose to 7% in August compared to 6.71% in July.

“I think it (food inflation) is because of the market reading the sowing data, as something that is signalling a future shortage, which is probably misplaced. There is scope for the month on month spike to come down,” the CEA said, responding to queries on the spike in food inflation.

He said he expected investment spending to come back to the levels the country experienced from 2006 to 2012.



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