RBI governor Raghuram Rajan, on Monday, said the current level of the rupee is "pretty reasonable" and any attempt to devalue it may lead to a surge in inflationary pressures and "offset any benefits"
The rupee, on Monday, depreciated by 13 paise to end at 67.20 against the American currency owing to sustained dollar demand from banks and importers.
Sluggish local equities even put more pressure on the domestic unit despite weak dollar overseas.
Trading sentiment was by and large tepid as traders refrained from taking any fresh positions and anxiously awaiting the announcement of the next RBI governor, a forex dealer commented.
The domestic currency opened substantially lower at 67.15 a dollar against last Friday's closing value of 67.07 at the Interbank Foreign Exchange (Forex) market here due to increased demand for the American unit.
But it reversed most of its initial losses in late morning deal and rebounded smartly to hit a fresh intra-day high of 67.0525 following fresh dollar selling by exporters.
However, the recovery proved short-lived in absence of any positive economic indicators and witnessed a sharp reversal in afternoon session to touch a low of 67.21 before ending at 67.20, revealing a loss of 13 paise, or 0.19 per cent.
The rupee had dropped 16 paise to 67.07 on last Friday.
Meanwhile, RBI governor Raghuram Rajan, on Monday, said the current level of the rupee is "pretty reasonable" and any attempt to devalue it may lead to a surge in inflationary pressures and "offset any benefits".
He also said that India has to go a long way to reach the per capita GDP level of China and needs many more years of sustainable strong growth.
The RBI fixed the reference rate for the dollar at 67.1015 and euro at 74.1673.
In cross-currency trades, the rupee rebounded sharply against the pound sterling to finish at 89.06 compared to 89.51 last weekend and also firmed up against the euro to end at 74.28 from 74.65.
The domestic unit, however, declined further against the Japanese yen to settle at 63.56 per 100 yen from 63.34 earlier.
In the meantime, country's exports turned positive after 18 months in June, recording a growth of 1.27 per cent, pushed up by increase in shipments of agri commodities, pharmaceuticals and engineering goods.
The merchandise exports totalled $22.57 billion as against $22.28 billion in the same month last year.
Rising exports and decline in imports also brought down the trade deficit in June to $8.11 billion as against $10.82 billion in the year-ago month.
Foreign portfolio investors (FPIs) bought securities worth Rs 4,061.22 crore last week as per Sebi's record including the provisional figure for July 15.
In worldwide trade, the US dollar traded in a remarkably tight range despite robust macro data outcome and record high for equities, as calm returned to the currency market after a failed weekend coup in Turkey.
The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.06 per cent at 96.64 in early trade.
Crude prices edged lower in Asian trade on easing concerns over supply disruption as investors digested the news that a military coup that broke in Turkey over the weekend has failed.
In the forward market, premium for dollar moved down on mild receivings from exporters.
The benchmark six-month premium for December softened to 181-181.75 paise from 182.5-183.5 paise and forward June 2017 contract also fell to 379.25-379.75 paise as compared to 381.5-382.5 pasie last weekend.
Meanwhile, the flagship benchmark sensex dropped further by 89.84 points to end at 27,746.66 due to sustained profit-taking ahead of earnings season. The broder Nifty also lost nearly 33 points to settle at 8,508.70.
Illustration: Uttam Ghosh/Rediff.com
