Govt may announce import curbs to check dollar outflow

The Centre is exploring possibilities of more import curbs including that of gold to check widening current account deficit (CAD)which has left the rupee vulnerable and equity markets in a sea of red.

The new restrictions are being planned after the Thursday's rout in equity, bond and money markets which, a top finance ministry official said, took cue from the international developments.

“Rupee, Balance of Payments, CAD are the main worries. We have strategy in place to tackle situation. We will take action at opportune time on these issues," the official said on a day when the rupee fell to a record low of 74.45 to a dollar .

Sensex shed over 750 points to end at a six-month low of 34,001 and NSE Nifty ended below the 10,300 mark. The rout in India and across emerging markets is attributed to US President Donald Trump’s comment against the Federal Reserve on Wednesday. Heightened fears of trade war between the US and China, rising US bond yields and strengthening of dollar too contributed.

"What happened in the US yesterday (Wednesday) had a ripple effect here on Thursday. The IMF has downgraded global growth rate, US growth rate for next year, both these had impact on markets," the official told reporters.

The government will take action at an appropriate time to check widening CAD and going forward there are indications that oil prices will fall, which will have positive implications on the rupee, he said.

On rising oil prices, he said that the government would not ask oil companies again to bear the brunt even if the prices of petrol and diesel were rising.

The Re 1 cut by OMCs earlier this month was just a one-time measure and the government has no intention of asking them to do that again.

Following the comments, shares of OMCs surged in intra-day. Shares of HPCL surged 19% to hit a high of Rs 215.40, BPCL jumped 7% to Rs 284.80 and IOC gained nearly 8% to Rs 134.