As the constantly falling rupee creates new market fears, the Finance Ministry on Wednesday said that the government and the RBI will do everything to ensure that the rupee does not depreciate to “unreasonable levels”. The rupee touched a new lifetime low of 72.91 to the dollar in the opening trade on Wednesday but recovered 69 paise by the afternoon on suspected intervention by the RBI.
“Government and RBI will do everything to ensure that rupee does not slide to unreasonable levels. Today’s correction seems to reflect that realisation,” Economic Affairs Secretary Subhash Chandra Garg tweeted.
“There was no fundamental rationale for the rupee to depreciate to levels seen till yesterday,” Garg said. “It reflected overreaction of market operators,” he added.
The rupee traded in a range of 71.86 to 72.91 in the day’s trade. Market experts attributed the morning’s fall to surging crude oil prices and unabated foreign fund outflows. Escalating trade war concerns, consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices, kept the rupee under pressure, dealers said.
Due to the slight recovery in the rupee by afternoon, benchmark Sensex surged about 305 points to end at 37,717.96 on Wednesday, spurred by bargain-hunting in FMCG, metal and capital goods stocks. The broader Nifty too regained the key 11,300-mark.