Falling Rupee: TOI says ‘it’s all right’, Express says ‘hawkish commentary roiled markets’

While the Indian rupee has continued to hit record lows, editorials by prominent English dailies have differed on the role played by the Reserve Bank of India.

The Indian Express criticised the RBI’s increase in interest rates, saying that the “unexpectedly hawkish commentary roiled global markets” and the central bank “should be circumspect about how it proceeds as the global economic environment becomes increasingly challenging”.

However, the Times of India – in an editorial titled “It’s all right” – said the bank was “prudent” in its intervention. “It’s adeptly managed the trilemma faced by emerging markets”, it noted, adding that the rupee was depreciating because of “developed country inflation and geopolitics”, and that “India’s macroeconomy is sound”.

An online editorial in the Telegraph, meanwhile, observed that the decline in value against “major currencies has to be viewed within a set of macroeconomic factors” and the rupee is a case in point. “The challenge before the RBI is this: how much to let the rupee depreciate and how much to intervene to prop it up? Too much depreciation would raise domestic inflation rates as the rupee-price of imports, especially oil, would raise costs of production.”

The rupee’s downfall is being attributed to the US Federal Reserve increasing its federal funds rates to combat inflation, which in turn is being blamed on several issues such as the Ukraine war and global supply chain disruption. The UK’s pound sterling also hit a record low this week. On Saturday, finance minister Nirmala Sitharaman said that the rupee had “held back very well" against the US dollar as compared to other currencies – it hit 81.90 against the US dollar Wednesday.

The Hindu also published an editorial headlined “Currency pressure” last week. “The fact that the rupee is not alone in depreciating against the dollar can be of little comfort to Indian companies reliant on imports of raw materials or services for the smooth functioning of their businesses. They are struggling to contend with rising costs at a time when domestic demand is still to regain a durable post-pandemic footing,” it said.

“With the rupee’s real effective exchange rate, or trade-weighted average of its value, also signalling that the Indian currency is still overvalued, the RBI’s rate setting panel will have a fine tightrope to walk next week as it battles to restore a semblance of price stability without choking growth and by ensuring the rupee does not weaken too sharply,” the paper said.