BENGALURU: Finance minister Nirmala Sitharaman on Sunday said India remained the world’s fastest growing economy and the uncertainty in West Asia, along with India’s import dependence on three major commodities, resulted in the weakening the rupee against the dollar.“Whenever there is a severe fluctuation or volatility in rupee versus dollar, the RBI intervenes in the market. It is not to fix a price but to stop the slide and stabilise it. For this purpose, forex reserves are used. Furthermore, on account of the increased number of foreign institutional investors (FII) and foreign direct investments (FDI) booking profits and exiting the country due to strategic investments developing in the US, our reserves are coming down. This is causing the fluctuation,” Sitharaman said.She added it’s not only the rupee that’s under pressure, as currencies such as the Japanese Yen and the Korean Won had also fallen sharply against the dollar.The minister said the more significant challenge was persistent uncertainty in West Asia, while imports of crude oil, gas, fertilisers and gold were also pushing up dollar demand. “With crude and gas not being produced in India and limited internal supply of fertilisers and gold, there is a huge amount of money which has to be paid in forex which is adding to the rupee versus dollar situation,” she said.She also noted that India is buying fertiliser at about Rs 3,000 per bag and selling it to farmers at Rs 300, implying a subsidy of roughly Rs 2,700 to Rs 2,800 per bag.
