CEA Ananth Nageswaran says USD-Rupee Volatility Not A Cause Of Concern

Chief Economic Adviser Dr Ananth Nageswaran on Tuesday was reported as stating that Rupee's slide was particularly not a sign to worry. According to him India's forex reserves were sufficient while India's external borrowings were low indicating that the country is better geared to manage vulnerabilities.

In June this year, an agency report quoted RBI governor, Sanjay Malhotra, stating that forex reserves at $691.5 billion were sufficient to meet 11-months of goods imports and 96% of external debt outstanding. India's forex reserves recently touched $702.96 billion in the week to September 12.

Factors such as US-Federal Reserve's latest rate cut, America's recent policies around tariffs, and the more recent immigration related uncertainties have been reasoned as causes for the Rupee's decline. The Rupee declined to a low of 88.46 against the US Dollar thus resulting in commodities such as iPhones, smartphones, gold and even overseas trips slightly expensive for Indians.

According to the Chief Economist, Bond Yields had briefly touched levels of 6.6 percent before cooling marginally. He averred that these could cool further and that Indian bonds were a good opportunity for investors.

What are bonds and what do they mean?

A bond is a scheme through which the government builds capital while investors earn an interest. A bond yield is the return an investor may get periodically over the maturity period of a bond. Bonds have a relationship with currencies. For example, a rising yield is generally perceived as lack of investor appetite for instruments such as American treasuries. This is also understood by many as flow towards higher-reward higher-risk investments. And a falling yield suggests otherwise.

One way to interpret Dr Nageswaran's comments would be that increase in bond-yields is signalling movement among investors to high-risk high-reward categories. But in an era when government securities were offering a yield of 6.5% (as in September 2025), should one invest in g-secs? The CEA commented, "At current yield levels, Indian bonds are a good opportunity for investors,"

Published on: Tuesday, September 23, 2025, 06:24 PM IST