FinMin Closely Monitoring Rupee Movement as Economic Concerns Rise

The rupee's decline past 90 against the US dollar is under close observation by the government and regulators. Economic Affairs Secretary Anuradha Thakur mentioned on Monday that measures might be taken if the situation worsens. "Anything above 90, everyone starts talking about it. Even, we start watching it carefully," she stated in an interview.

Thakur highlighted that while a weaker rupee can enhance export competitiveness, the situation is being monitored with stakeholders. "We are watching together with regulators and other stakeholders. We will see how to handle it if a situation more than uncomfortable happens," she added. The Economic Survey 2025-26 noted a 6.5% depreciation of the rupee from April 1, 2025, to January 22, 2026.

Currency Performance and Budget Announcements

The rupee's decline was similar to the Japanese yen's 5.5% drop but was more significant than other Asian currencies like the Philippine peso and Indonesian rupiah. In the recent Budget, changes related to Alternative Investment Funds (AIFs) were addressed, fulfilling a long-standing industry demand.

Anuradha Thakur explained that amendments to the LLP Act would align with AIFs' functional needs, allowing them to operate as Limited Liability Partnerships (LLPs). This change aims to remove operational constraints faced by AIFs, which often function as trusts. The amendments will also simplify document filing for partner entry and exit.

Investment Opportunities for Foreign Residents

The Budget also proposed allowing Persons Resident Outside India (PROIs) to invest in equity instruments through the portfolio investment scheme (PIS). This move is expected to boost foreign currency inflow. PROIs can now invest in listed Indian companies' equity instruments via PIS.

Finance Minister Nirmala Sitharaman announced an increase in the investment limit for individual PROIs from 5% to 10%. The overall investment cap for all individual PROIs will rise from 10% to 24%. These measures aim to attract more foreign investments into India.

The government's proactive stance on monitoring the rupee's performance reflects its commitment to maintaining economic stability. By addressing industry demands and enhancing investment opportunities, it seeks to bolster economic growth and resilience in challenging times.

With inputs from PTI