Indian rupee gains

rupeeMUMBAI. – India’s rupee gained marginally against the dollar yesterday, after the central bank announced fresh measures last week to drain cash from the market and prop up the ailing currency. The rupee strengthened to 60,55 to the dollar, after closing last Thursday at 60,88, before markets shut on Friday for a local holiday.

Indian shares were also up 0,75 percent to 18 930,64 points yesterday, reacting to strong Asian market gains.
The Reserve Bank of India announced last Thursday it would auction US$3,6 billion worth of government cash management bills once a week in a bid to reduce supply from the financial system.

The first sale was due to take place later yesterday.
The measures are the latest by the RBI to bolster the rupee, which hit a new lifetime low of 61,80 to the greenback on August 6.

The rupee is among the worst performing currencies in Asia this year, amid slackening domestic growth, rising overseas fund outflows, weak exports and a high current account deficit.

Sentiment has also improved after India last week named former International Monetary Fund chief economist Raghuram Rajan as its next central bank governor, when the current governor D. Subbarao exits next month.

“The forex market is reacting to all measures announced recently, including the announcement of a new RBI chief,”
said Naveen Mathur of Mumbai’s Angel Broking.

“There is also optimism that the government will do more,” Mathur said.
The RBI last month announced steps to bolster the rupee, including raising short-term interest rates and lowering the amount a bank can borrow or lend under its daily liquidity limit. – AFP.

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