 "Rupee depreciates after news report saying govt mulling devaluation")
Rupee depreciated against the dollar with a news report emerging today that the commerce ministry is pushing for devaluation of the rupee. The currency unit thus reversed its initial gains.
Reports on a TV news channel suggested that the Finance Ministry and Commerce Ministry would discuss calibrated devaluation of the rupee on September 20 to boost exports.
The reports were later denied by both the ministries, which led to trimming of the depreciation.
Rupee resumed higher today at 66.88 per dollar as against the closing level of 66.89 per dollar in the Forex market and firmed up further to 66.82 per dollar on initial dollar selling from banks and exporters.
However, reports led to the weakening of the rupee by 0.28% to 67.0750 to the dollar before the denial to the reports came.
The denial caused the rupee to recover and it was trading at 67.0550 at 1.01 pm.
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There was no truth to reports of a rupee devaluation, economic affairs secretary Shaktikanta Das said.
Das said the rupee's value was determined by the market and that there was no plan to change policy on the currency's valuation.
Minister of state (independent) for commerce and industry Nirmala Sitharaman also tweeted that "I had no conversation on devaluation of any currency with any news correspondent. Any quotes/mentions referring to me on this topic baseless.
The tweet, however, did not clarify whether her ministry is pushing for rupee devaluation or not.
Earlier reports had too suggested that the ministry had floated a Cabinet note to set up a panel that will assess the true value of the rupee against currencies of India's trading partners. Such a panel, comprising representatives of commerce ministry, finance ministry and RBI, was proposed to be set up under the Department of Economic Affairs.
The country's merchandise exports contracted for 18th month in a row till May, 2016 to recover slightly by over 1% in June. However, it again contracted in July. The August data is expected to come on Thursday.
Maintaining rupee value is RBI's domain and it does not interfere unless there is huge volatility.
Exporters have been calling RBI to cut the policy rate and weaken rupee to restore their competitiveness.