Indian rupee that had a firm beginning against the US dollar on Thursday gave up its initial gains and closed 13 paise down at 67.02 against the US dollar at the Interbank Foreign Exchange (Forex) Market as media reports said that government is planning to devalue the local currency to boost exports. Even a denial from Union Commerce Minister Nirmala Sitharaman couldn’t help rupee recover much. “I had no conversation on devaluation of any currency with any news correspondent. Any quotes/mentions referring to me on this topic baseless,” Sitharaman tweeted. Sentiments were also affected by sustained demand for the American currency among banks and importers. The domestic unit had closed at 66.89 level against the US dollar on Wednesday as hopes of a rate hike by US Federal Reserve eased.
Experts said that as it is not easy to devalue or appreciate a currency as the local unit remains a market driven exchange rate. Anindya Banerjee, analyst, Kotak Securities said, ” We see little merit in the rumours of rupee devaluation and continue to see RBI and government working in tandem to keep Rupee stable through constructive monetary and fiscal policies. Over the near term a range of 66.60 and 67.20/25 is on cards. In case the pair sustainably breaks out of this range, expect a 0.5/0.8% extension in that direction.”
Earlier, Indian rupee opened firm and was trading 5 paise up at 66.84 (9.50 am) against the US dollar as selling of American currency increased among banks and exporters amid positive opening of domestic equity markets. The BSE Sensex and NSE Nifty closed higher on account of buying in last hour of trading in select blue chip companies amid mixed global cues. Sensex ended 40.66 points up at 28,412.89, while NSE Nifty closed 15.95 points up at at 8,742.5.
Overseas, yen strengthened against dollar as the Bank of Japan’s monetary policy meeting next week took center stage with speculation about possible policy steps swirling, including a focus on negative rates over asset purchases. The local currency touched a high and low of 67.07 and 66.82 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 67.02 and for Euro stood at 75.36 on September 15, 2016. While the RBI’s reference rate for the Yen stood at 65.58, the reference rate for the Great Britain Pound (GBP) stood at 65.58.The reference rates are based on 12 noon rates of a few select banks in Mumbai.