Rupee increases 4 paise adjacent to dollar

In an interview to Now, Nick Parsons of National Australia bank said, ” Yuan devaluation will worsen background for Asian currencies”.

In a note on Wednesday, Richard Iley, chief Asia economist at BNP Paribas SA, said the rupee outperformance compared with its Asian peers is likely to continue because India’s trade exposure to China is the lowest in the region and the country has benefited from weaker gold and oil prices recently.

China further guided its currency lower today after it roiled markets yesterday with its decision to push their currency down 1.9 per cent against the US dollar, the largest devaluation in years.

The rupee had lost 6 paise to 63.87 against the dollar in Monday’s trade on fag-end demand for the greenback from importers.

The Indian rupee fell sharply on Wednesday to touch its lowest level against the US dollar since September 2013, as China’s move to devalue the yuan sparked fears of a global currency war. That meant the yuan rose as the dollar jumped over the past year, hurting its exporters and raising the threat of politically unsafe job losses.

The Sensex has gained 0.6 percent this year and trades at 15.4 times projected 12-month earnings. “Rather than changing their ways, the Chinese government seems to be doubling down”.

“The exact impact will depend on how the new mechanism is implemented in practice”, said an International Monetary Fund statement.

China reduced the value of the yuan Tuesday in an effort to boost its lagging economy by making its goods more affordable to foreign buyers. The IMF’s board is due to consider that recommendation in October. The S&P BSE Sensex was set for its lowest close this month, while sovereign bonds held steady.