The Indian rupee recovered sharply from record lows on Wednesday after the finance ministry indicated that the “government and RBI will do everything to ensure that rupee does not slide to unreasonable levels.”
A likely meeting by Prime Minister Narendra Modi to review the state of the economy on Saturday also arrested the currency’s slide yesterday. Sources said the review meeting to be held on September 15 by Modi is to be attended by Finance Minister Arun Jaitley and Finance Secretary Hasmukh Adhia, among other senior government officials. There could be another meeting on Friday evening as well on the state of economy, the sources said.
The rupee on Wednesday rebounded from the historic low of 72.91 to end higher by 51 paise at 72.18 against the dollar after the finance ministry assured of steps to avert its fall to “unreasonable levels”. The rupee had crashed to an all-time low of 72.91 in morning trade tracking higher crude oil prices that increased concerns of widening trade deficit at home. Department of Economic Affairs Secretary Subhash Chandra Garg said on Wednesday that the there is no fundamental reasons for rupee to fall.
“No fundamental rationale for rupee to depreciate to levels we saw till yesterday. It reflected overreaction of market operators. Government and RBI will do everything to ensure that rupee does not slide to unreasonable levels. Today’s correction seems to reflect that realisation,” Garg said in a tweet. Earlier this week, finance ministry officials had indicated that the government will not cut excise duty on petrol and diesel, as that would widen the fiscal deficit and affected the current account deficit. The government has also indicated steps to arrest currency’s fall, including raising of dollar through issuance of NRI deposits. The RBI intervention in the foreign exchange market also seemed to have aided the rupee’s recovery. India’s benchmark 10-year sovereign yield also eased to 8.13 per cent. Rupee has been depreciating sharply in last few sessions and tagged among the worst performing currencies in Asia having weakened by 13.81 per cent since the beginning of the year.
The rupee also bounced back against the British Pound to close at 93.76 per pound from 94.63. It recovered against Japanese yen to finish at 64.74 per 100 yens from 65.29 earlier. The rupee also recouped against the euro to end at 83.58 from 84.20.
Meanwhile, the BSE Sensex, finished higher by 304.83 points at 37,717.96 on Wednesday, while the broader NSE Nifty jumped 82.40 points to end at 11,369.90.