Union Finance Minister Nirmala Sitharaman on Thursday, while allaying concerns around the depreciation of rupee, said the government and the Reserve Bank of India are working to stabilise it, and would continue to keep vigil on the fluctuation in the currency.

       Replying to a discussion on the FY26 Budget in the Rajya Sabha, Sitharaman said that overvalued currencies erode national competitiveness as exports become expensive and domestic companies will have to be given support. Rupee depreciation refers to the decline in the value of the Indian rupee relative to other currencies, particularly the US dollar.

       Made amid severe external challenges, Sitharaman said that the Union Budget FY26 has tried to prepare for eventualities such as the uncertainty surrounding many Indian imports critical for India’s growth.

       “There are no models that you can build and understand the trends because they are very dynamic. Despite that, we have tried keeping the assessment as close as possible. This uncertainty is still playing out and many Indian imports are also going to be left with uncertainty,” Sitharaman said.

       The FM said that the value of Indian rupee is influenced by various factors such as the index of the dollar, trends in capital flows, level of interest rates, movement in crude prices. “The fourth quarter of 2024 witnessed extensive currency-related volatility across major countries, not just India. So Indian rupee, like other Asian currencies, depreciated against the US dollar on account of uncertainty pervading the global macro economy,” Sitharaman said.

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       The Budget, the FM said, has kept its goal to accelerate growth, secure inclusive development, invigorate private sector investments, uplift household sending sentiments and enhance spending power of the Indian rising middle class.

       Highlighting globalisation versus fragmentation, the finance minister said that while all countries want to have a free market situation, there are aggressive tariff and non-tariff barriers. “So you are facing a world where a lot of talk goes on about keeping the markets free, but no one country wants to have a free market when it comes to their interest,” FM said.

       Sitharaman said that debt consolidation has been given a big priority in the Budget along with strengthening the state’s liquidity position.

       She said that the money lying unused today is available for the governments, state or the Centre, to see and to use it much before submitting demand for additional resources.

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