The Government’s announcement on steps to boost exports and attract more foreign capitalon Wednesday lifted the rupee from near record lows and close with a gain of 7 paise at 60.40 against the US dollar.
A late recovery in local stocks and fag-end dollar selling by exporters also supported the currency.
The rupee opened sharply lower at 60.91 a dollar from the previous close of 60.47 at the inter-bank foreign exchange market and dropped to 61.20, near the all-time low of 61.21 recorded on July 8, on initial weakness in domestic equities and sustained dollar demand from importers.
Later, expectations of intervention by the Reserve Bank of India (RBI) at the lowest level and fresh dollar selling by exporters helped the rupee to bounce back to a high of 60.35 before settling at 60.40, a rise of seven paise.
Finance Minister P Chidambaram on Wednesday said steps would be taken to further liberalise FDI and encourage public sector undertakings to raise funds overseas. He said the Government is looking at raising import duty on non-essential luxury items and promoting exports. A sovereign bond issue to raise forex is an “an option on the table,” he added.
The Commerce Ministry also decided to raise the rate of interest on the subsidy scheme for exporters to 3 per cent and widen the coverage of the scheme to cover more sectors.
“Rupee was seen recovering against the US dollar and erased the heavy losses incurred yesterday. It was seen gaining on the back of the positive statements given by the FM and some encouraging announcements made by the Commerce Minister,” said Abhishek Goenka, founder and CEO of India Forex Advisors.
The benchmark S&P BSE Sensex ended flat on Wednesday, recovering from a 220-point fall. FIIs bought shares worth Rs 256.45 crore on Tuesday, as per provisional data with the bourses.
In the global market, the U.S. dollar was trading flat against its major rivals as investors awaited a statement on monetary policy from the U.S. Federal Reserve and the preliminary estimate of second-quarter growth for the world’s largest economy.