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'No role of finance ministry in fixing exchange rate'

Parkash Bhargava in New Delhi

Finance Minister Yashwant Sinha today said that fixing the rupee exchange rate is the responsibility of the Reserve Bank of India and finance ministry has no role in it.

Dening reports of overvalue of rupee by three per cent, Sinha said there is no truth in the reports. It is not the job of the finance ministry to advise the RBI on the issue of exchange rate.

However, the government was interested to ensure that the foreign exchange market remained orderly, similar to the stock exchanges.

Undue volatility should be avoided, Sinha said and added that the finance ministry does not advise on the sensitive issue of exchange rate of the rupee.

Complimenting the RBI for its role in keeping the exchange rate more or less steady, he said the apex bank role was to keep a watch on the foreign exchange market which it had been managing effectively so far.

According to reports, the finance ministry is of the view that the rupee is overvalued by three per cent and the exchange rate of rupee should be Rs 43.70 per dollar.

The foreign exchange market has suddenly turned volatile and the rupee slid to a more than a seven-month low of around Rs 42.78 in the inter-bank foreign exchange market on April 6.

Today, the dollar was quoted at around Rs 42.70 per dollar as against Rs 42.44/42.45 per dollar last week.

The market operators said that the volatility in the exchange market was mainly due to political developments in the past one week. But it was expected to stablise soon.

UNI

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