The question is arising that can Raghuram Rajan really strengthen the rupee against the dollar? When Raghuram Rajan was the governor of RBI, what was the position of the rupee?
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| Raguram Rajan - Ex-Governor of RBI File Photo (TBI) |
Rupee continues to weaken against the dollar. The Indian rupee touched an all-time low against the US dollar on Wednesday. It closed at 83.01 with a fall of 61 paise. This is the first time that a dollar has crossed Rs 83. The opposition has started surrounding the government regarding this.
A statement of former Union Finance Minister and Congress
leader P Chidambaram has also come. Taking a dig at the government, he advised
Prime Minister Narendra Modi. He said that if the rupee is to strengthen
against the dollar, then former Reserve Bank of India (RBI) governor Dr.
Raghuram Rajan should be consulted.
Also Read : America: Dollar is getting benefit of troubles of other economies
The question
is arising that can Raghuram Rajan really strengthen the rupee against the
dollar? When Raghuram Rajan was the governor of RBI, what was the position of
the rupee?
First know what P.
Chidambaram said?
Chidambaram advised Prime Minister Modi. Said, 'I request
the Prime Minister that if he wants to improve the rupee, then he should
immediately have a closed-door meeting of Dr. Raghuram Rajan, Dr. C.
Rangarajan, Dr. YV Reddy, Dr. Rakesh Mohan and Mr. Montek Singh Ahluwalia to
consider it. Should be called Finance minister, RBI governor and officials
should also be present in this meeting.
Chidambaram further wrote in his tweet that the government
seems helpless against the continuous fall in the value of the rupee. The
falling rupee has an impact on inflation, current account deficit and interest
rates. He said that the government needs to take experience from the former
economists of the country. Let us tell you that Rangarajan, YV Reddy and
Raghuram Rajan have been former governors of RBI. Rakesh Mohan has been the
Deputy Governor Governor. At the same time, Montek Singh Ahluwalia was the
Deputy Chairman of the Planning Commission during the UPA government.
Now know
what was the position of the rupee against the dollar at the time of Raghuram
Rajan?
Raghuram Rajan was the 23rd Governor of the Reserve Bank.
His tenure lasted from 2013 to 2016. On September 4, when he joined the post of
RBI governor, a dollar was worth Rs 67.03. After this it came down to Rs 63.17
till 2014. Meaning the position of the rupee improved significantly during this
period. In 2015, the position of the rupee again started weakening and the
value of one dollar increased from 63.17 to 66.16 rupees. It remained stable in
2016 and when Raghuram Rajan's term ended, that is, on September 4, 2016, the
price of one dollar was Rs 66.67. Meaning, during the three years of Rajan's
tenure, the rupee also moved towards improvement and then stopped only after
coming closer to the position of 2013.
Now let us also see the figures between 2016 and 2018, when
Urjit Patel was the governor. In those two years, the value of one dollar had
increased from Rs 67.19 to Rs 69.79. Meaning the Indian currency weakened by
2.6 rupees in two years.
After this, the Indian currency suffered the most during the
Corona period in 2019-2020. Within a year, the rupee fell by about four rupees
against the dollar. In 2019, the price of one dollar was Rs 70.42, which
reached Rs 74.10 by 2020. In 2021, there was an improvement in it and the price
of one dollar decreased from 74.10 to 73.91 rupees. This year it has increased
the most. Now the value of one dollar has reached 83.01 rupees. Looking at the
figures, there is a continuous devaluation of the rupee. It has picked up pace
in the last few days.
How can
rupee strengthen?
To understand this, we have consulted the expert of economic
affairs, Prof. Spoke to Pradeep Joshi. He says, “It is true that the position
of the rupee against the dollar is deteriorating continuously, but the good
thing is that it has also improved against the currency of other countries. For
example, the position of the Indian rupee has improved against the currency of
Pound, Euro and other strong countries.
Pro. Joshi further says, 'Right now the whole world is
grappling with the ill effects of Corona and the Russo-Ukraine war. So how can
India be saved from this? At present, the foreign exchange with India is
decreasing. If it increases, then the Indian currency will automatically
strengthen against the dollar.
How does
the value of rupee decrease and increase?
Pro. Joshi said, “Every country has reserves of foreign
exchange, from which it transacts internationally. The movement of the currency
of that country is decided only by the decrease and increase in the foreign
exchange reserves. If the dollar in India's foreign exchange reserves is equal
to the US rupee reserves, then the value of the rupee will remain stable. If
the dollar decreases with us, the rupee will weaken, if it increases, the rupee
will strengthen. This is called floating rate system. India adopted this system
in 1975.
Rupee will strengthen against the dollar only if we spend
less foreign exchange and get more or if we spend $100 to import some goods,
then export the same amount of goods. This will stabilize the foreign exchange
and strengthen the rupee.
Dollar and
Rupee were equal in 1948