Minister of State for Finance Jayant Sinha said the weakening of the Indian rupee against the US dollar was a market response to China devaluing its yuan to ensure that Indian business remains competitive.
As the stock markets bounced back after a day of bloodbath, the government today said India is well positioned to get through the global financial crisis and is seizing on it as an opportunity to ensure it becomes the fastest growing large economy in the world.
Minister of State for Finance Jayant Sinha said the weakening of the Indian rupee against the US dollar was a market response to China devaluing its yuan to ensure that Indian business remains competitive.
"We have this period of adjustment and re-adjustment which we are going through and that will naturally create some turbulence in the market. Thankfully, we in India are well positioned to get through this turbulence," he told NDTV.
The BSE benchmark Sensex, which had tanked over 1,600 points on Monday, recovered ground on Tuesday and ended 291 points higher at 26,032.
India's macro-economic fundamentals are very strong and the economy was recovering nicely.
"Our people are very appreciative of our reforms agenda.
So we look very well-positioned. As Prime Minister and Finance Minister both of them have said this is really a good opportunity for us in India to take advantage of this turbulence and really ensure that we are positioned as the world's fastest growing large economy," he said.
On the meltdown in China, he said there was a sense that China wants its currency Yuan to become one of the world's global reserve currency.
"They want it to basically to be more market determined than it is right now and that is what is essentially that they have been saying as a reason for their devaluation.
"Those factors are definitely at play but the reality is when the Yuan comes down and it becomes more market determined, it is going to affect the Indian currency as well," he said.
Sinha said the pricing of Indian rupee relative to other currencies was a function of inflation differentials across markets and GDP growth as well as the productivity improvements in the underlying Indian economy.
"Obviously if our competitors China and other countries are seeing a situation where their currencies are declining in value relative to the US dollar, then in terms of competitiveness we have to follow suit to some extent and the market would enable that to happen as well so that the rupee becomes more competitive," he said.
He said it was "India's moment and I think we are seizing the moment."
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