Union Commerce and Industry Minister Piyush Goyal on Thurdsay said that the government is constantly monitoring the rupee falling against the dollar and said that he is confident that things will get back to normal in the near future.
In an interview to Network18 Group Editor-in-Chief Rahul Joshi, upon being asked if it worries him that rupee has gone all-time low against dollar, Goyal said, "We are monitoring the situation and we are very confident that things will go back to normal in the near future."
The rupee fell 10 paise to close at 88.12 against the US dollar on Thursday amid sustained foreign fund outflows and a stronger greenback.
However, positive sentiment in the domestic equity markets -- which were buoyed by the GST rate revision -- and a drop in international crude oil prices prevented sharper losses in the local unit, according to forex traders.
Piyush Goyal on Thursday said the government expects tax revenues to rise, not fall, following the rationalisation of Goods and Services Tax (GST) rates, as higher demand will offset any rate cuts.
“In fact, with the boost in demand, revenue will probably go up,” Goyal said in an interview to Network18 Group Editor-in-Chief Rahul Joshi, while downplaying concerns that the reforms could lead to revenue loss.
He added that the GST changes, which simplify the structure into fewer slabs, would have “hardly a very consequential impact” on collections while significantly benefitting consumers and businesses.
At the interbank foreign exchange, the rupee opened at 88.09 against the US dollar and traded in the range of 87.85-88.19 before settling at 88.12, down 10 paise from its previous close.
The rupee recovered 13 paise from its all-time low level to settle at 88.02 against the US dollar on Wednesday.
"The rupee fell after rising in the morning as equities were unable to sustain their gains while the Reserve Bank of India sold dollars at the higher end and FPIs continued to be dollar buyers and equity sellers," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
"US tariff concerns, along with capital outflows, have been constantly weighing on sentiments of rupee, which has not been able to show any gains except sporadically. The revisions to GST... led to a marginal improvement early in the morning," he said.
Bhansali said the local unit is expected to trade in the range of 87.80 to 88.50.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was up 0.08 per cent to 98.21.
Brent crude, the global oil benchmark, was trading 1.07 per cent lower to USD 66.88 per barrel in futures trade.
On the domestic equity market front, Sensex rose 150.30 points to settle at 80,718.01, while Nifty was up 19.25 points to 24,734.30.
Foreign institutional investors offloaded equities worth Rs 106.34 crore on Thursday, according to exchange data.
Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said the rupee traded weak as FII remained sellers while GST reform provided limited support.
"Selling pressure was visible in capital markets after a higher opening, keeping rupee under pressure. Dollar index stayed volatile near 98.25, with participants now focusing on the upcoming US non-farm payrolls and unemployment data, which will set the tone for global currencies. Rupee is expected to trade in the range of 87.85 – 88.45," he added.
With inputs from agencies
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