A day after the RBI’s swift move to stem the fall of rupee, the domestic currency notched up a smart gain of 94 paise to settle the day at 52.70/71 against the dollar on fresh selling of the U.S. currency.
In early trade, the rupee shot up by a whopping 143 paise to 52.21 at the Inter-bank Foreign Exchange. Moving in tune with stock markets, it, however, lost some of the gains later in the day. The BSE benchmark index Sensex shed a hefty 345 points, on intense selling in the latter part of the day.
Dealers said fresh selling of dollars by banks in view of restrictions imposed by the Reserve Bank of India (RBI) helped the rupee surge against the Greenback.
The RBI yesterday imposed restrictions on forward trading in the local currency by FIIs and traders and also capped banks’ exposure to the forex market.
Finance Minister Pranab Mukherjee welcomed the steps taken by RBI to check the rupee’s slide. “I also welcome the (RBI) Governor’s resolve to check the speculative interventions in foreign exchange market which among other factors have contributed to the sharp depreciation of the Indian rupee against the U.S. dollar,” he said in New Delhi.
“The reason behind the gain of rupee is the measures taken by the Reserve Bank of India yesterday, which put restriction on speculation along with reduced open limit. Due to these new norms, many institutions have forcibly unwinded their position and sold dollars, which supported rupee,” Indian Overseas Bank General Manager (Treasury) T.S. Srinivasan said.
