New Delhi: The Principal Economic Advisor in the Finance Ministry, Sanjeev Sanyal on Friday said that the Government is confident of defending dollar-rupee fluctuations, adding that foreign exchange reserves are sufficient to defend the rupee.
"RBI has quite correctly preserved ammunition in terms of foreign exchange reserve. It has USD 400 billion worth of it, which is quite enough to defend rupee if necessary," he asserted.
Addressing the issue of depreciation of rupee against the US dollar, Sanyal said that even though the rupee had witnessed a fall against the dollar, it continues to be stable against most currencies.
"Rupee has depreciated very significantly since the beginning of the year. But if you take a five-year perspective you will see the rupee has by and large been stable against most currencies with one exception of the dollar," Sanyal added.
On the issue of the Reserve Bank of India's intervention in the depreciation of rupee against dollar, Sanyal said, "Reserve bank watching rupee, the question is to what extent do you interfere. Reserve bank has a long tradition of allowing exchange rate in a medium-term to adjust."
Regarding the increase in fuel prices, the Principal Economic Advisor said, the price of crude oil is needed to be watched. "Need to watch crude prices. We will take a necessary action when required," he said.
Earlier, on September 5, Finance Minister Arun Jaitley said that the rupee had not weakened.
In a media briefing, Jaitley said, "We must bear in mind that dollar has strengthened against almost every currency. The rupee has either consistently strengthened or remained in a rage, not weakened. Most of the other currencies of the world, compared to what it was 4-5 yrs ago, Rupee is better off."
The Finance Minister also said that reasons behind the devaluation of the Indian rupee against the dollar were global.
"If you look at the domestic economic situation and global situation, there are not domestic reasons attributable to this, but all reasons are global," he said.