Excessive rupee volatility may impact trade, but remains a free-float currency: Finance secretary Tuhin Kanta Pandey
Subscribe to enjoy similar stories. NEW DELHI : Finance and revenue secretary Tuhin Kanta Pandey emphasized on Monday that the Indian rupee remains a free-floating currency and the government is not alarmed by exchange rate fluctuations, which are driven by cross-border capital flows. This comes as the rupee tumbled to a record low of 87.29 against the US dollar, dropping 67 paise in early trade, following fresh tariffs imposed by US president Donald Trump, sparking fears of a broader trade war.
“Currency volatility is an issue that the RBI (Reserve Bank of India) looks into, but otherwise, it is a free-floating system. See, there will be such episodes where when something is there," Pandey told Mint, referring to external events, adding that capital outflow will have an impact on exchange rate. Read this | Trump's tariff war: How India might avert damage When asked about his concerns over the rupee’s sharp depreciation, Pandey reiterated his confidence in the system but acknowledged the risks of imported inflation and rising import costs.
"It will have impact on exports also. Exports will become more attractive. My point is that you know exchange rate management is RBI's field.
If there is an excessive volatility, the RBI handles it. But it's also a free float system. We are not into a controlled exchange rate regime," Pandey said.
The sharp decline in the rupee follows Trump’s 25% tariffs on imports from Mexico and Canada, along with a 10% levy on Chinese goods and Canadian energy, fuelling uncertainty in global trade. Indian officials have flagged external economic headwinds as a potential drag on domestic growth. The Economic Survey 2024-25, presented in Parliament on 31 January by chief economic advisor V.
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