Meanwhile, the head of currencies at Macquarie Bank Ltd.in Singapore said the mixed messages were “part of the struggle for influence over monetary policy” following the departure of former Reserve Bank of India governor Raghuram Rajan.
Advertisement
The rupee fell abruptly on Thursday after a television channel reported that the commerce ministry will propose a devaluation in the unit to promote dwindling exports, but trimmed losses after a finance ministry denial. It hovered in a range of 66.82 per dollar and 67.0750 per dollar during the morning trade.
The finance ministry, which has a far more central role in economic policy, denied that any discussion on a devaluation had taken place. The central bank does, however, consult with the finance ministry on its exchange rate policy. It fell to 67.0650 earlier, the weakest level since September 1.
India’s commerce ministry is responsible for trade policy but not for exchange rate policy, which is the domain of the RBI. However, some losses were capped after government officials clarified that they had no intention to devalue the Indian currency. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. An employee of DCB Bank Ltd. said the central bank had called up traders to enquire about the fall in the rupee.
Commerce Minister Nirmala Sitharaman on Thursday said she did not make any comment on devaluation of the Indian rupee.
One commerce ministry official said the department favored the demands of exporters and might raise the matter with the finance ministry before taking it to the cabinet. A replacement as deputy governor has yet to be chosen, and it is possible Patel could find himself heading a panel with dovish leanings.
Advertisement
A drop in annual inflation to a five-month low of 5.05 percent – in the RBI’s comfort zone – has opened the door to a possible rate cut next month or in December, say economists.
