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Nirmala Sitharaman said it’s not rupee sliding but dollar strengthening: Here’s what she meant and how she is right

The Indian rupee has consistently outperformed other currencies even as global inflation remains at record levels, and the Russia-Ukraine war continues to grind, throwing curveballs at economies already battered by the scourge of the coronavirus outbreak.

Even as India remains an outlier in heading off inflation and currency depreciation among major economies in the world, the Indian finance minister Nirmala Sitharaman recently attracted a barrage of online criticism for her informed comment on the strengthening American dollar vis-a-vis other currencies across the globe.

Nirmala Sitharaman says the rupee is not sliding but the dollar is strengthening

Speaking to reporters after attending the annual meetings of the International Monetary Fund (IMF) and the World Bank, Sitharaman said that the fundamentals of the Indian economy were strong and that inflation was low compared to other parts of the world.

“First of all I would look at it as not rupee sliding, I would look at it as dollar strengthening, dollar strengthening incessantly,” she said in reply to a question on the weakening rupee.

All other currencies around the world are performing against a strengthening dollar, she said.

“And I’m not talking technicalities, but it is a matter of fact that India’s rupee probably has withstood this dollar rate going up, the exchange rate in favour of dollar strengthening is there and I think the Indian rupee has performed much better than many other emerging market currencies,” she added.

Sceptics and leftist propagandists, whose knowledge of the world economy and factors affecting currency exchange rate is as poor as their grasp of the political aspirations of the country, made a beeline to mock the finance minister over the nimble-footed monetary policy India embraced in the wake of unprecedented inflation and accompanying volatility amid the Russia-Ukraine crisis.

Factors contributing to the inexorable rise of the USD

Firstly, there are several factors affecting the value of the currency. One of them is the interest rates that the reserve bank manages to control the circulation of money in the economy. The US Fed has hiked rates five times this year, most recently by three-quarters of a percentage point in September in their bid to fight inflation. The US is facing unprecedented inflation in decades, following the V-shaped recovery after the coronavirus pandemic brought the country to a standstill. The unemployment rate in the US is at record low levels, which has contributed to the skyrocketing inflation. These developments prompted the US Fed to continuously hike interest rates, which is nothing but an attempt to limit the amount of money available in the market. By raising interest rates, the Fed aims to sap money off the economy and induce it into a state of deflation to grapple with the rising prices.

However, this is just one aspect of the interest rate. The higher interest rates also provide investors with better returns in the US markets than elsewhere, which is one of the reasons why foreign investors pull money invested in different markets around the world and park it in the US market. This, in turn, increases the demand for American currency, USD, which raises the dollar’s value in the international market.

Further, the primacy of USD in international finance and trade, especially in energy trade, also has a domino effect in strengthening the American currency. The US dollar rules the roost of the world economy as compared to other currencies, including INR, Chinese Yuan, Russian ruble, etc. The preeminence of the dollar over economies also contributes to strengthening the American currency amid swelling inflation and global volatility. 

To deal with the US Fed rate hike that strengthens the dollar, which in turn powers much of the world trade, countries take appropriate action to tame domestic inflation and price rise, which typically involves raising interest rates by the reserve banks of the respective countries. This is why the Reserve Bank of India raised interest rates in the last few months. But this measure involves a kind of spillover effect: It lowers demand not only for domestic output but also for imports, failing to take into account which could induce an unintentionally steep global downturn.

Countries across the globe have to navigate the tightrope of arresting inflation but not so much as ushering themselves into recession. Other factors have also contributed to the strengthening of the US dollar, but they are beyond the scope of this article. So when Nirmala Sitharaman said it is not the Indian rupee that is sliding but the US dollar that is strengthening, she accurately encapsulated the conundrum facing the Indian economy.

But one would assume social media trolls attacking the finance minister and taking swipes at her do not possess the mental capacity to grasp complex issues such as the world economy and the spillover effect of interest rates on currencies of other nations. Add to the mix the ongoing war between Russia and Ukraine, and the complexities compound further. However, opposition political leaders, even those with finance backgrounds, resorting to attacks underscores the desperation that has set in even though she has done a fairly decent job in controlling the depreciation of the rupee.

The Indian rupee outshines other major currencies in the world

While asserting that the US dollar has strengthened, Nirmal Sitharaman also said that India has outperformed some of the major economies in the world. Let’s look at how the rupee has fared against some of the top currencies in the world:-


Since the start of the Russia-Ukraine war on 24 February 2022, which acted as a stimulus to the global financial crisis, especially with the consumer food inflation that has reached record levels, given that Russia and Ukraine are both among the top exporters of wheat, and several African and Latin American countries are overtly dependent on Moscow and Kyiv for their grain requirement, the Indian rupee has depreciated against its US counterpart.

From 1 USD equal to Rs 74.64 on 24 February, it has come down to Rs 82.29 on 17 October, close to a 9 per cent fall in its value.

Source: Google Finance

However, the Indian rupee has outperformed several other major economies and has managed to limit its slide against the all-powerful dollar, thanks to timely intervention by the Indian government and the Reserve Bank of India. 


Before the start of the war, 1 USD amounted to 0.89 Euros, but today, i.e. on 17 October 2022, 1 USD is equivalent to 1.03 Euros, a staggering 17 per cent depreciation in its value in the course of close to 8 months.

Source: Google Finance


Similar is the case with the pound sterling, which has lost 18 per cent vis-a-vis the US dollar. On February 24, one dollar was equal to 0.75 GBP. However, on 17 October 2022, its value dropped to 0.89. 

Sitharaman dollar
Source: Google Finance

USD vs Chinese Yuan

Likewise, the Chinese Yuan, too, has lost considerably in the 8 months since the war began and amidst periodic rate hikes by the US Fed. One US dollar is currently equivalent to 7.2 Chinese Yuan while it was 6.33 Chinese Yuan before the start of the war in February 2022.

Sitharaman dollar
Source: Google Finance

USD vs Australian Dollar

The Australian Dollar has also tanked amid record-level inflation and the Russia-Ukraine crisis. From 1 USD equal to 1.40 Australian dollar before the Ukraine-Russia conflict, it has slumped to 1.60 as of 17 October 2022, a 14 per cent drop in its value as against the US dollar as compared to 10 per cent slump faced by INR against USD.

Sitharaman dollar
Source: Google Finance


The Singaporean Dollar (SGD) remains one of the very few global economies that have fared better than the INR in terms of dealing with the USD rise. The USD is currently equivalent to 1.43 SGD, depreciating about 5 per cent in the 8 months since the war when it was 1.36 SGD. 

Sitharaman dollar
Source: Google Finance

How India continues to be on firm financial footing amid uncertain global cues

Taken together, the Indian rupee has been among the pick of the currencies to push back against an ominously rising American dollar and months after the devastating bout of coronavirus outbreak cratered economies and brought countries to a standstill. While the Indian rupee has fallen 9 per cent in the last 8 months, most of the other major currencies have registered double-digit slumps, establishing India’s impressive handling of the economy, which also earned her the praise of the IMF officials, who recently lauded the Indian government for its efficient handling of multiple crises in an uncertain global environment.

While each country has a unique set of challenges and shares different geographical and geological attributes, strengths and weaknesses, the fact that the Indian rupee has performed significantly better than most of the major currencies in the world is a testament to the Indian government’s prowess in tackling once-in-a-lifetime kind of crisis, especially in the wake of a global pandemic that wreaked havoc and bled economies around the globe, underscoring their resolve to build a robust and resilient India that is as insulated as possible from the global shocks.

Ayodhra Ram Mandir special coverage by OpIndia

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Jinit Jain
Jinit Jain
Writer. Learner. Cricket Enthusiast.

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