The Indian rupee plummeted to 67.07 against the US dollar in morning trade today after television channel CNBC-TV18 reported that the commerce ministry is weighing plans to devalue the rupee to support the country's exports.
The CNBC reported that the finance and commerce ministries are meeting on 20 September to consider devaluing the rupee.
Reports also said RBI intervened in the market to arrest further fall in the rupee, which helped steady the currency later, The rupee was trading off the day's lows at 67.00 against Wednesday's close of 66.8875/8975 a dollar.
RBI only intervenes in the market to check extreme volatility, it does not set rates.
The finance ministry dismissed the report as lobbying by struggling exporters seeking a competitive boost from a cheaper currency, but did not rule out the possibility of the rupee being revalued.
"The value of rupee is determined by the market and there is no plan to change policy," the finance ministry's economic affairs secretary, Shaktikanta Das, told reporters. "Reports that the government wants to devalue the rupee are false."
Also, reports said the government or the RBI may not want to devalue rupee, especially when the country's imports are rising.
India's merchandise exports fell 6.8 per cent year-on-year in July, which took month's trade deficit to $7.8 billion, even as India appetite for global products remained unsatiated.
However, according to government data, imports fell faster, by 19 per cent, on low oil prices.
The Federation of Indian Export Organisations (FIEO) had discussed the issue of the rupee's exchange rate and interest rates with the commerce ministry.
"A rupee devaluation is required," its director-general Ajai Sahai said. "Indian exporters are outpriced in the global market."
A commerce ministry official also supported the idea, adding that it might raise the matter with the finance ministry before taking it to the cabinet.
However, a senior finance ministry official said no proposal had been made to devalue the rupee.