Rupee’s Value Should Be Allowed to Stabilize Naturally, Says PM’s Economic Advisor

In a recent discussion, a prominent member of Prime Minister Narendra Modi’s Economic Advisory Council emphasized that fears regarding the Indian rupee potentially depreciating to 100 against the US dollar are overstated. Shamika Ravi, speaking on an episode of the ANI podcast hosted by journalist Smita Prakash, asserted that the currency should be permitted to find its ‘true value’ organically.

Ravi likened the exchange rate to a valve on a pressure cooker, suggesting that the rupee is in a phase of ‘settling’ as economic pressures build. “When there is pressure in the economy, something has to give, and the exchange rate serves as the mechanism to manage that pressure,” she explained. According to her, allowing the rupee to float without intervention is crucial, stating, “If the rupee reaches 100 to the dollar, so what? It’s just a number.”

This perspective comes amidst growing concerns about the rupee’s stability, particularly in the face of global economic uncertainties and inflationary pressures. Ravi highlighted that artificially maintaining a specific exchange rate can inadvertently lead to inflation, which would ultimately harm the economy. Her comments suggest that the focus should be on long-term stability rather than short-term fixes.

The rupee’s performance against the dollar has been a hot topic among economists and policymakers, especially during times of economic volatility. Ravi’s position advocates for a more hands-off approach, arguing that the rupee’s valuation should not be dictated by temporary market sentiments or government interventions, but rather, it should reflect underlying economic realities.

This approach aligns with broader economic philosophies that favor market-based solutions over regulatory controls. By allowing the rupee to find its own value, the hope is to foster a more resilient financial ecosystem that can withstand future shocks. As India navigates its economic landscape, the discourse around currency valuation is likely to remain a critical issue, warranting careful consideration from both the government and the economic community.

Source: scroll.in