The rupee's rise against the dollar was not hurting exports but the government was looking at ways to use rising foreign exchange reserves, a senior union minister said on Friday.

"It is not as if exports are becoming uncompetitive," Arun Shourie, divestment minister, who also holds charge of commerce, told Reuters on the margins of a conference with exporters in Bangalore.

The rupee was at 47.8925/9025 a dollar in late afternoon trade, up 0.72 per cent over the past year, but is down 17 per cent versus the euro at 51.6.

Shourie said liberalisation of imports was not the only option before the government to put record forex reserves of more than $71 billion to good use.

He said suggestions had come from various arms of the government on how to use the reserves, but did not give details.

Some analysts say India could consider pre-paying some of its foreign currency debt and the central bank has said it is not averse to the idea.

Shourie said a stronger rupee had created an arbitrage opportunity, triggering inflows from western nations where interest rates are lower than those in India.

Expatriate Indians are said to be increasing their deposits in India to reap the interest rate gains coupled with a reduced foreign exchange risk.