Indian rupee recouped in Friday’s trade after falling over 10 paise on Thursday. Reports of devaluation by the government spooked the Indian rupee that dropped to 67.0750 in late morning deals on Thursday before closing 13 paise down at 67.02. It had opened higher at 66.88 against the US dollar on Wednesday on dollar selling by importers and bankers. Later, Finance and Commerce ministry officers came out to deny the reports of currency devaluation to boost exports. “I had no conversation on devaluation of any currency with any news correspondent. Any quotes/mentions referring to me on this topic baseless,” Union Commerce Minister Nirmala Sitharaman tweeted.
On Friday, the local currency was trading 17 paise up at 66.85 against US dollar in early trade (at 9.47 am).
Rajeev Malik, senior economist at the global brokerage firm CLSA while talking to CNBC TV18 said that he doesn’t think that India really needs devaluation of its local currency at this point and if at all government goes for it, it could be a costly affair.
On the future outlook for rupee, Malik said, “There is a structural chances of rupee weakening due to high inflation in the country.”
The reports on rupee devaluation came in the aftermath of exports falling since the last 20 months to which Malik said all export related economies were worse off in the past one year.
He further added that the rupee devaluation report is intriguing and cannot understand the govt’s liking for a competitive exchange rate.
Calling the reports false, Economic Affairs Secretary Shaktikanta Das on Thursday said that the value of rupee is determined by the market and there is no plan to change the policy.
The discussion should now be how Indian rupee should made be made more competitive, Malik further added.
According to the data available with the Reserve Bank of India, the local currency has depreciated by 0.88 per cent in the past one year till September 15.