The Indian rupee has done relatively well in the first half of this year, although signals of further interest rate hikes from the US Federal Reserve could increase pressure on the currency to depreciate further , making imports more expensive even though exports could crawl, the finance ministry said. Saturday.

The pressures exerted on the external sector by the soaring dollar, rising interest rates and external financing appear as new challenges for India’s macroeconomic stability, the ministry said, noting that this is ” no time for rejoicing and complacency” despite India’s robust growth and better inflation management so far. in 2022-23. Foreign exchange reserves are adequate despite falling rapidly, he said.

Retail inflation “remained stable” and averaged 7.2% between April and September, lower than the 8% median inflation of major economies, the ministry said the surge in September inflation at 7.41% was due to what “appears to be mainly seasonal” in food prices.

“Absent any further weather extremes, retail price inflation is expected to decline over the remainder of the fiscal year,” he said in the September Monthly Economic Review.

Arguing that the appreciation of the US dollar against most currencies was mainly due to rising US interest rates, the ministry said the rupiah depreciated 5.4% against the dollar between April and September, against an 8.9% depreciation of the six main currencies. However, a chart shared in the review pegs the appreciation of the US dollar against the Indian currency at 6.5%.

India’s medium-term growth rate is likely above 6%, the ministry said, referring to IMF forecasts of 6.1% growth in 2023-24, up from 6.8% this year .

“While capital formation and digitalization are driving the medium-term potential growth rate, learning losses caused by pandemic-induced shutdowns and rising obesity levels are holding it back. A healthy and educated India is a productive India,” the Ministry of Finance stressed.