Finance Minister Nirmala Sitharaman has addressed the recent depreciation of the Indian rupee, which is hovering near historic lows against the US dollar. Speaking at the 23rd Hindustan Times Leadership Summit (HTLS), the minister expressed confidence that the domestic currency will find its equilibrium, supported by India's robust economic growth outlook.
Rupee's Slide and the Minister's Perspective
The Indian rupee touched an all-time low of ₹90.46 per US dollar on December 4. This decline is attributed to factors like the delay in a finalized India-US trade deal and persistent foreign capital outflows from the Indian equity markets. However, Sitharaman urged for a nuanced debate on the currency's valuation.
"The rupee will have to find its own place," stated the Finance Minister. She emphasized that discussions about currency levels must be grounded in current economic conditions rather than simplistic comparisons with the past. "Look at the fundamentals of the economy. Look at the growth. The currency debate must be circumscribed by present realities rather than compared in a black-and-white manner with past situations," she elaborated.
Strong Fundamentals Amid Currency Weakness
Notably, the rupee's weakness is occurring against a backdrop of impressive macroeconomic indicators. India's GDP growth for the second quarter of FY26 surged to a six-quarter high of 8.2%. Simultaneously, retail inflation plunged to a record low of 0.25% in October.
Sitharaman believes the growth momentum seen in Q2 is sustainable. She projected that the overall growth for the current fiscal year (FY26) could be 7% or even higher. On the topic of a weaker rupee benefiting exporters, especially amid US tariffs, the FM acknowledged the argument but remained circumspect. "I am not fully satisfied with that explanation — but it is true that the economy’s strength must be assessed alongside it," she added.
Assessment of Recent Fiscal Reforms
When questioned about the impact of two significant reforms—the income tax cuts and the rationalisation of GST rates—the Finance Minister suggested that a clearer assessment would emerge with time.
Regarding income tax reductions, she noted that while the complete effect on tax collections will be visible next year, an immediate impact on consumer spending is already evident. For the changes in Goods and Services Tax (GST), which apply uniformly across sectors, Sitharaman advised evaluation over the medium term to gauge their full effect on the economy and trade.
The minister's comments underscore a focus on long-term economic stability and growth fundamentals, suggesting that these will ultimately guide the rupee's trajectory in the global market.
