Bangalore August 13 (TIP): Indian rupee breached 65 against US dollar, its weakest since September 2013. The rupee has remained under pressure ever since China has devalued yuan on Tuesday.

The rupee resumed higher at 64.72 as against yesterday’s closing level of 64.78 at the Interbank Foreign Exchange (Forex) Market and firmed up to 64.63 on initial dollar selling by exporters on the back of recovery in the equity market.

But it failed to maintain early momentum, trading lower by 20 paise at 65 per dollar on fresh dollar demand from banks and importers. It moved in a range of 64.63 and 64.99 during the morning trade.

The Indian stock markets also gave up on its initial gains of over 200 points and were trading 100 points up in afternoon trade.

In the overseas market, the dollar suffered from a broad-based weakness against rival currencies on Wednesday as investors are worried that China devaluation of the yuan could delay an expected US interest rate hike.

Anindya Banerjee, associate vice president- currency derivatives, Kotak Securities told Financial Express “Indian Rupee is facing competitive devaluation pressure due to the devaluation of Chinese Yuan. Rupee, which has been an out performer over the past 18 months had become a pain trade for exporters and economy. Comments from government officials alluded to the fact that a strong Rupee is hurting us.”

On yuan devaluation impact on Indian stock markets he said, “Rupee volatility should not have much impact on stock market but in case it depreciates too much too fast, then it can trigger stop loss exits from domestic debt markets and even equity markets. However, for that to happen Rupee may have to depreciate beyond 66.00/66.50 against the US Dollar.”