The value of the rupee declined from 63.33 against a dollar on December 31, 2014, to 79.41 on July 11, 2022, Finance Minister Nirmala Sitharaman said in a reply quoting RBI data.
Sitharaman said global factors such as the Russia-Ukraine conflict, rising crude oil prices and tightening of global financial conditions are the major reasons behind the depreciation of the rupee against the US dollar.
She, however, said that the other global currencies like the British pound, the Japanese yen and the euro have weakened more than the Indian rupee against the US dollar and, therefore, the rupee has actually strengthened against these currencies this year.
The outflow of foreign portfolio capital is a major reason for the depreciation of the Indian rupee, the finance minister said, adding, monetary tightening in advanced economies, particularly in the US, tends to cause foreign investors to withdraw funds from emerging markets.
Foreign portfolio investors have withdrawn about $14 billion from Indian equity markets in 2022-23 so far, she said.
On the impact of falling currency, she said, nominal exchange rate is only one of the factors that impact an economy.
The depreciation of a currency is likely to enhance the export competitiveness, which in turn impacts the economy positively, while the depreciation also impacts the imports by making them more costly.
The Reserve Bank of India (RBI) regularly monitors the foreign exchange market and intervenes in situations of excess volatility. It has raised interest rates in recent months that increase the attractiveness of holding Indian rupees for residents and non-residents.
Earlier this month, the RBI raised the overseas borrowing limits for companies and liberalised norms for foreign investments in government bonds as it announced a slew of measures to boost foreign exchange inflows.
The RBI increased the ECB limit under the automatic route from USD 750 million or its equivalent per financial year to USD 1.5 billion, and eased norms for foreign portfolio investments in the debt market.
(Inputs from PTI)