(a) Whether the rupee shot up to a five year against the
US Dollar due to sharp rise in demand by the Foreign
Institutional Investors (FIIs) as reported in The Pioneer,
dated the February 3, 2005:
(b) if so, the details thereof alongwith the reasons therefor; and
(c) the steps taken b y the Government to always maintain this upward trends?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI S.S. PALANIMANICKAM)
(a), (b) & (c) : The Rupee was valued at Rs 43.41 against the
US Dollar on December 3, 1999. After depreciating against the
US Dollar during the years 2000-01 and 2001-02, the Rupee
started appreciating against the US Dollar from May 2002
onward. On February 3, 2005, the Rupee was valued at 43.36
against the US Dollar, thereby almost reaching the high which
it had achieved on December 3, 1999. In the current year (2004-05),
after briefly depreciating against the US Dollar during
May-August 2004, the Rupee appreciated against the US Dollar
by 6.1 per cent during the period September- February 2004-05.
This appreciation has primarily been on account of higher
supply of foreign exchange, compared to demand, arising out
of foreign portfolio inflows, trade remittances, etc. against
the backdrop of the weakness exhibited by US Dollar against
other major currencies in the international market. The
movements in the Rupee value in recent years have been smooth
and orderly, avoiding any significant costs to the economy. The
Rupee continues to be broadly market-determined with the
Reserve Bank of India (RBI) intervening only occasionally for
curbing excess volatility