The government on Tuesday dismissed concerns that the recent weakening of the Indian rupee against the US dollar reflects poor economic health, asserting that the country's macroeconomic fundamentals remain robust and overall economic activity continues to display resilience.
In a written reply to an unstarred question in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary said the exchange rate of the rupee is influenced by a range of domestic and global factors rather than being an indicator of the economy's underlying strength.
He explained that fluctuations in the rupee are driven by movements in the US Dollar Index, capital flows, interest rate trends, crude oil prices and the current account deficit, among other factors.
"Various domestic and global factors influence the exchange rate of the Indian Rupee (INR), including movements in the Dollar Index, trends in capital flows, interest rates, crude oil prices and the current account deficit. At present, the macroeconomic fundamentals of the Indian economy remain strong," the minister said.
Chaudhary noted that despite global uncertainties, India's economy has remained on a strong growth path. He highlighted that the country has recorded real GDP growth of more than 7 per cent in each of the last three years, supported by robust domestic demand, healthy corporate balance sheets and prudent fiscal management.
The government also pointed to high-frequency economic indicators for the first quarter of 2026-27, which suggest continued momentum in economic activity and consumer demand, reflecting the resilience of the domestic economy.
Responding to queries on measures being taken to address pressure on the rupee, the government reiterated that the value of the Indian currency is market-determined and that there is no fixed target, level or trading band maintained by the authorities.
It said the Reserve Bank of India (RBI) closely monitors developments in the foreign exchange market and intervenes whenever necessary to curb excessive volatility and maintain orderly market conditions.
According to the government, the RBI also keeps a close watch on global developments that may influence the USD-INR exchange rate, including monetary policy decisions by major central banks, key global economic data releases, OPEC+ decisions, geopolitical events and movements in currencies of G-10 nations and other emerging market economies.
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The government further said the RBI has introduced several measures to encourage foreign exchange inflows and reduce depreciation pressure on the rupee. These include changes to the External Commercial Borrowings (ECB) framework announced in February 2026, expansion of the Fully Accessible Route (FAR) for government securities, higher investment limits for Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and other eligible overseas investors, a swap facility for fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, concessional forex swap facilities for eligible borrowings and restoration of the export realisation period to nine months.
On the external sector, the government said India's external debt remains sustainable and is being managed prudently. As of the end of March 2026, the country's external debt stood at USD 762.8 billion, compared with USD 736.4 billion a year earlier. At the same time, the debt service ratio improved, declining from 6.6 per cent at end-March 2025 to 5.8 per cent at end-March 2026.
The government also highlighted the country's comfortable foreign exchange reserve position. As of June 12, 2026, India's forex reserves stood at USD 671.6 billion, providing an import cover of 10.3 months of goods imports and covering about 88 per cent of the country's external debt outstanding as of end-March 2026.
The government maintained that these indicators reflect the strength of India's external sector and reinforce the resilience of the economy despite global financial and geopolitical challenges.
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