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As exporters started complaining about adverse effects of rising value of the rupee against the dollar, the government on Thursday said appreciating Indian currency reflects strength of the economy and it cannot do much so long as the unit rises and falls in a range.
"As long as the movement is not volatile and takes place based on fundamentals within a sort of range and moves two ways, there is not much that one can do about it," Finance Secretary Ashok Chawla said when asked if the RBI or the government will intervene to rein in firming rupee.
Chawla said rising value of the rupee reflects strong fundamentals of the Indian economy and capital flows into the country. "It (rupee value) has been appreciating. It shows the fundamental strength of the economy. The fact that capital flows, which had dried up earlier, are coming. And that there is general positive sentiments about the Indian economy."
Rupee has risen about ten per cent since March this year, hitting exporters, who are facing slackening demand abroad, as a strong domestic currency makes exports expensive in dollar terms in the overseas markets.
"The appreciating rupee will have negative effect on exporters, who are already facing lack of orders," Federation of Indian Export Organisations president A Sakthivel said.