Market Forces Should Determine Rupee Value: Jayant Sinha

New Delhi: Value of the rupee should be driven by market forces even as the Reserve Bank and the government strive to maintain stability in the currency market, Minister of State for Finance Jayant Sinha has said.

"The currency rate is set by market forces and our job, mainly RBI's job, is that it finds its level in a stable order," he told PTI in an interview.

He was replying to a query on whether the government or the Reserve Bank is targeting a level for rupee, which is currently trading at over 66 to a dollar.

The rupee has depreciated about 8 per cent so far this fiscal. The devaluation of Chinese yuan last month has created turmoil in the financial markets worldwide which saw huge depreciation in the Indian currency.

Asked if India should also devalue its currency to protect domestic interest, Sinha said competitive devaluation would not be good and the recent G 20 meeting of finance ministers has also endorsed this view.

"The G20 meeting the Finance Ministers clearly issued a policy statement saying we don't want to get into a policy environment where there is competitive devaluation.

"Therefore we expect all the economic powers to behave very responsively and they have indicated they will," Sinha said.

A weak rupee increases India's import bill. But with low commodity and oil prices, the depreciation in the rupee would have a limited impact on the current account deficit.

Last week, G-20 Finance Ministers called for moving towards market-determined currency rates and resist from competitive devaluation in a virtual disapproval of China's recent devaluation of yuan that triggered shocks in the global economy.

"We reiterate our commitment to move toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments.

"We will refrain from competitive devaluations, and resist all forms of protectionism," said the communique issued at the end of the two-day meeting of the G20 Finance Ministers and Central Bank Governors.

The statement comes against the backdrop of unsettling currency devaluation done by China recently that sent markets globally into a tailspin.