Rupee devaluation by Commerce Ministry! Give me a break…

Financial markets work a lot on rumors and market gossip.  Infact, it is difficult to distinguish information from market noise. This is what makes markets exciting and frustrating at the same time.

Yesterday was one such day. A leading business channel flashed that Commerce Ministry is mulling devaluation of Rupee.

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 theFinance 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.  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.

I mean it was even fine to suggest Finance Ministry planning such a move after all it can devalue the currency by mere fiat. But Commerce Ministry can’t really do any such thing.

We have hardly done these things since currency started to broadly float since 1991. It has been a managed float where central bank has intervened off and on but govt has largely stayed away from any such fiat.

The media should check what it is publishing/streaming. You can’t be as random as this…

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