Union Finance Minister Nirmala Sitharaman on Sunday (June 14, 2026) said fluctuations in the rupee against the US dollar are driven by multiple global and domestic factors, including geopolitical uncertainties, foreign capital movements and India’s import dependence on crude oil, fertilisers and gold.
She underlined that the Reserve Bank of India (RBI) intervenes only to curb excessive volatility and not to maintain a fixed exchange rate.
Addressing reporters at Devanahalli near Bengaluru during a programme marking 12 years of Prime Minister Narendra Modi-led NDA government, Ms. Sitharaman said exchange rates were influenced by a range of external developments and market conditions.
“Whenever there is a severe fluctuation or volatility, the Reserve Bank intervenes in the market not to fix a price. Only to stop any kind of fluctuation. The Reserve Bank comes into picture, stabilises it, and comes out, for which it uses foreign exchange from the Reserve. So it does it sparingly,” she said.
The Finance Minister said factors such as U.S. Federal Reserve policy decisions, global currency movements and foreign investment outflows affected the rupee.
“The rupee and its fluctuations are because of various factors: uncertainties outside, the U.S. Fed talking about increasing or decreasing interest rates in their country, the Japanese yen crashing against the dollar and the Korean won crashing. So there are several reasons which determine the exchange rate between countries and currencies,” she said.
Ms. Sitharaman said foreign institutional and direct investors booking profits and shifting funds due to developments in the U.S. also impacted reserves and currency movements.
She added that India’s need to import crude oil, fertilisers and gold required substantial dollar payments, making foreign exchange management critical.
Highlighting fertiliser subsidies, she said, “Since the time of Covid, we have been giving a bag at ₹300. After Covid, when we imported it from foreign countries, the same quantity, which is one bag, touched ₹3,000, which means per farmer, per bag, we are giving anywhere between ₹2,700 as subsidy.”
On allegations by the Karnataka Government that the Centre was not providing the state’s due share of funds, Ms. Sitharaman said allocations were determined by the Finance Commission and not by the Union government.
“Who sets the principle? Not PM Modi, not Government of India. There is a Finance Commission which goes around all states and decides on the basis of some metrics. That once decided, for the next five years, come what may, the central government will have to pay the state,” she said.
Rejecting the argument that states should receive back all the taxes they contribute, she said, “If Bengaluru, Karnataka contribute and I need to get all the money back, the principle doesn’t work like that.”
On the economy, Ms. Sitharaman said official data and global institutions consistently showed India as the fastest-growing major economy.
“Repeatedly last five, six years, India is the fastest growing economy. And this year, when the GDP numbers came, every sector right from manufacturing to agriculture, service, logistics, transport, every sector has shown substantial growth,” she said.
On employment, Ms. Sitharaman said unemployment was declining, according to official surveys and pointed to government initiatives such as internships, skilling and AI-based training programmes.
On state guarantee schemes, she said welfare promises should be backed by adequate fiscal resources.
“If your budget has such resources to give, state it in the budget, discuss in the Assembly, and please give. But don’t give if you don’t have the money and then blame the Centre saying, the Centre is not giving me money,” she said.
She urged Karnataka to utilise central budget provisions for cold storage and warehousing projects through Farmer Producer Organisations, noting that no proposals had yet been received from the State.
Ms. Sitharaman also credited Prime Minister Narendra Modi’s diplomatic engagement for evacuating Indian citizens during international crises and ensuring energy supplies and defending the right to democratic protest.
Published – June 14, 2026 06:25 pm IST
