Re recovers on apparent RBI intervention

Suspected RBI intervention hauled the rupee off a record low struck on Tuesday afternoon, reassuring a market worried by the central bank’s earlier inaction as the currency’s fall gathered pace.

Striking 58.98 per dollar at its weakest, the rupee had plunged 3.25 per cent so far this week, notching record lows for two consecutive days.

Dollar-selling by state banks, believed to be acting at the behest of the RBI, prevented a fall. The partially convertible rupee recovered to 58.52/53 per dollar.

“Finally the central bank stepped in. The selling was not huge but enough to cause a rebound in the rupee," said  a   dealer with a PSU bank, who declined to be identified.

Govt mulls NRI bonds

As the rupee tumbled to a new low on Tuesday, the government said that it will take more steps to enhance foreign institutional flows but ruled out any further curb on gold imports.

 It said that it is close to recommending to the Cabinet sectors in which the FDI limit needs to be enhanced.

 “We will continue to implement measures to ensure that portfolio investor inflows are enabled...some of these measures will be announced shortly,” Chief Economic Advisor Raghuram Rajan said.

 The government is considering issuing NRI bonds to bring in forex. The bonds could be reminiscent to Resurgent India Bond of 1998 and India Millennium Deposit of 2000 that sought to channelise NRI savings into India.

Experts said the bonds could carry 7-9 per cent interest and the tenure could vary from 3 to 5 years.