December 16th, 2011
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Rupee slump arrested

rupee-gainsMumbai: The Indian rupee is finally climbing after hitting an all-time low, breaching the 54 mark against the dollar yesterday. In today’s opening trade the Indian rupee gained nearly 2 per cent that is 74 paise. The value of rupee thus now stands at Rs 52.90 per US dollar. The sharp gains came after the Reserve Bank imposed restrictions on forward trading to check the slide of the domestic currency, which had tumbled to a record low some measures to stop the rupee fall.

Dealers said the sharp recovery of the rupee was due to restrictions imposed by the RBI on forward trading in the local currency by FIIs and traders, besides the cap fixed on banks’ exposure to the forex market. It has said that foreign institutional investors (FIIs) and companies cannot rebook cancelled forward contracts.

This will reduce volatility from frequently changed contracts. The RBI has also reduced the limit for forex hedging based on past performance. This could be a negative for corporates as it reduces ability of companies to hedge. Analysts said the steps taken by the RBI will certainly halt the slide in the Indian currency.


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