Yuan devaluation to have temporary impact on rupee: CEA

The finance ministry on Friday said the devaluation of the Chinese currency will only have a temporary impact on the rupee as India has adequate foreign exchange reserves. “What is happening in China has introduced some amount of volatility. Because our macroeconomic situation is better this should be seen as a temporary adjustment because our fundamentals are strong,” Chief Economic Advisor Arvind Subramanian said, adding “we have adequate (forex) reserves”.

The Indian currency had on Thursday hit its weakest level against the US dollar since September 2013, as China further devalued yuan. However, the rupee snapped its seven-day losing streak on Friday and closed 10 paise higher on fresh selling of greenback by banks and exporters on hopes of resumption of foreign capital inflows into equity markets.

India had foreign exchange reserves of USD 353.347 billion in the week to August 7, marginally down over the previous week.

The reserves had touched a life-time high of USD 355.46 billion in the fortnight ended June 19.

Marking its biggest single-day rise in nearly seven months, the benchmark BSE Sensex today surged 518 points to reclaim the 28,000-level.