RBI, govt move to bail out rupee - Livemint

Updated: Tue, Jun 11 2013. 08 17 PM IST Mumbai: The Reserve Bank of India (RBI) intervened in the currency market on Tuesday and sold dollars to prevent the rupee from falling below Rs59 per dollar, dealers said. The dollar sales started as the rupee was just away from the psychological Rs59 per dollar level and helped the rupee to recoup its losses all the way to Rs58.39 per dollar. The rupee has lost 7.1% this quarter, Asia's worst performance. Dollar sales by exporters and large companies provided some support to the rupee, dealers said. Trade was volatile as the rupee touched Rs58.70 per dollar twice after touching a new all time low of Rs58.99 per dollar. One- month implied volatility, a gauge of expected moves in the exchange rate used to price options, surged 143 basis points, or 1.43 percentage points, to 11.62%. Dealers however said that there was no consistent dollar sales initially from state-owned banks on behalf of RBI. The central bank doesn't comment on the day-to-day movements in the rupee, Alpana Killawala, Mumbai-based spokeswoman for the RBI, told Bloomberg by telephone. News that the government is considering selling bonds specially to attract dollar inflows from non-resident Indians (NRI) also helped the rupee. "The nation is weighing measures including a debt offering to citizens living abroad to attract investment and offset a record current-account deficit," Raghuram Rajan, the top adviser at the finance ministry, told reporters in New Delhi. The shortfall in India's current account, the broadest measure of trade, widened to a record of about 5% of gross domestic product in the year ended March 31, the government estimates. Comments from economic affairs secretary Arvind Mayaram in Delhi that the government expects foreign inflows into the debt market soon also stemmed the currency's slide. Outflows from the debt market is one of the reasons why the rupee has fallen sharply. "We will see correction in rupee in three to four days," Mayaram said adding that the government is not unduly worried about the currency's fall and it will stabilize soon. Harihar Krishnamoorthy, treasurer at FirstRand Bank Ltd said the rupee has been "oversold" "We have only seen $3 billion of outflows in the debt market. Equity markets are still holding on. I don't think it warrants the fall we have seen in the last two weeks. But right now the market is volatile and relying just on news flow," he said. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFSlyTtv5lG3ClYi8d22WACP0bFzg&url=http://www.livemint.com/Money/Ztxyewm1cY4G7XyTnqNbJM/Indian-rupee-extends-slide-to-hit-new-alltime-low.html

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