RBI discounts exporter fears as rupee hits 59.65 a dollar

The Reserve Bank of India (RBI) is not overly concerned about the firming up of the rupee against the US dollar and its likely impact on the country's exports, even as the Indian currency traded 30 paise higher at 59.65 against the dollar at 12.10 pm.

The rupee opened trading on the inter-bank foreign exchange market 15 paise higher at 59.80 a dollar against the previous close of 59.95 amidst heavy inflows of foreign funds to the domestic equity market.

CNBC-TV18 quoted RBI governor Raghuram Rajan as saying that he was not worried about rupee overvaluation for now even as continued dollar inflows lifter the rupee to an 8-month high, stoking concerns that it could make India's exports even more uncompetitive. 

''When we were at 60 a dollar, people said 75-80 rupees a dollar and now we are back at 60 a dollar, they are saying 55-50 a dollar and I heard some 45 a dollar also,'' Rajan said in an interview to CNBC-TV18's Latha Venkatesh.

Rajan also rejected any link between slowing exports and the strengthening of the rupee, saying it had more to do with the sluggish growth in developed countries.

However, he said India's export sector could be hurt if the rupee strengthened to 50-45 against the dollar.

Traders expect the rupee to trade in a range of 59.60 to 60.20 against the dollar in the short-term.

RBI in its first bi-monthly monetary policy announcement on Tuesday decided to keep the repo rate unchanged at 8 per cent.

It also kept the amount of cash that banks have to park with the RBI unchanged at 4 per cent of total deposits.

India's exports have slowed down in the last three months even as trade deficit has been narrowed.