India has enough firepower to fight volatility in the rupee, said Economic Affairs Secretary Subhas Chandra Garg.
The local currency, Asia’s worst-performing currency this year, hit an intraday all-time low of 69.09 against the U.S. dollar yesterday. It, however, managed to recoup of some the lost ground following the Reserve Bank of India’s intervention.
The government has adequate foreign exchange reserves and can opt for another tranche of foreign currency non-resident deposits if capital inflows are lesser than the current account and remittance deficits, Garg told BloombergQuint. “If at any stage we need to buttress our reserves, the options are open. There is a huge demand for Indian offerings — be it FCNR (B) deposits or sovereign bonds.”
FCNR deposits are term deposits non-resident Indians can open with Indian banks, helping the government boost its forex reserves.
The volatility in the rupee isn’t sharp as compared to other currencies, Garg said. “The rupee’s volatility is being managed in a sensible way… [in a] reasonable corridor of volatility.”
He added the Indian currency was holding up “much better” than in 2013, backed by improved forex reserves. Data released by the RBI showed India’s forex reserves at $410.07 billion in the week ended June 15, 2018 as compared to $289.67 billion in the week through June 7, 2013.