A day after the rupee hit a new life-time low, Niti Aayog vice-chairman Rajiv Kumar today opined that the currency should be allowed to find its "natural level" and termed calls for a stronger rupee as a "falsifiable belief".
The rupee has been breaching its lifetime highs against the dollar over the last few months and ended at 70.10 at today after plumbing a new life-time low yesterday at 70.16. By losing over 9 per cent year-to-date, the rupee is the worst performing major currency amongst its emerging market peers.
Calls for a stronger rupee is a "falsifiable belief" and a "confusion" in our minds, Kumar said speaking on the sidelines of an event here. "Allow the rupee to depreciate to find its fair value."
Kumar also said we have to do away with the mentality of judging an economy's strength with the level of its currency as there is "nothing" in a stronger currency.
If the rupee appreciates, exports become expensive which will make our goods uncompetitive in international markets, he said, underlining that the exports sector supports lots of jobs. And if the rupee strengthens, it incentivises imports and the rich to travel more.
Admitting that the country is fraught with many a problem which impact input cost for exports, such as expensive electricity and costly capital, therefore, the best way that the world has been adopting is to let the currency find its fair value. "And this is what is happening to the rupee as well," he said.
Asked when will the rupee appreciate against the dollar, he said the currency will strengthen when every youth gets a good job.
"The rupee will strengthen when our per capita income goes up to Rs 5,000 from Rs 2,000 now, (which will happen when our youth are employed" he said and asked the critics to keep "quiet".
Kumar was in the temple town to inaugurate a zero budget natural farming camp organised by the Sai Temple Trust.