By Arun Kumar, IANS
Washington : Expressing concern over the rising value of the Indian rupee, Finance Minister P. Chidambaram said this had posed a major challenge to the country’s exports and tax revenue and hoped the central bank would intervene if the movement gets disorderly.
“The depreciation in the value of the dollar versus the rupee has thrown up unexpected downside risks,” Chidambaram said in a lecture at the Peterson Institute for International Economics here Tuesday.
“It has challenged our exports and our tax revenue, and we may find ourselves in a situation where we need to provide for the consequences of an appreciating currency,” the finance minister said.
He was referring to the value of the Indian rupee appreciating over 11 percent against the dollar this year to touch nine-year highs, amid frantic pleas from the country’s exporting community for measures to addresses the issue.
“Our exchange rate policy is that we allow two-way movement of the rate and our only concern is that the movement should be orderly,” the finance minister said, noting that the rupee was stable against the euro and other currencies.
“Neither the government nor the central bank takes a view on the exchange rate. This is market determined and will be market determined,” Chidambaram said, but in the case where there was volatility or disorderly movement of the rupee, “I suppose the central bank will intervene.”
He said the level of appreciation of the rupee was “well beyond comfort levels. That is something we have to live with and our exporters will have to learn to live with it”.
Earlier, Chidambaram met US Treasury Secretary Henry Paulson to discuss his upcoming trip to India.
They also talked about the importance of developing Mumbai into an international financial centre and boosting private financing for the country’s infrastructure needs.
They discussed how financial regulators and the US could best assist India in achieving its economic and development goals, the treasury department said.