INDIA’S rupee gained against the dollar on Thursday (August 28), coming off its record low struck the day before, after the central bank announced yet another measure to try to stabilise the currency.
The battered rupee – which has lost nearly nine per cent in the past week – strengthened to 66.88 to the dollar, pulling back 2.8 per cent, from a record closing low of 68.80 on Wednesday.
The rupee plunged 3.86 per cent on Wednesday, its biggest one-day fall in nearly two decades.
Indian shares opened 0.61 per cent up at 18,106.29 points on Thursday.
The Reserve Bank of India (RBI) announced late Wednesday that it will provide dollars directly to oil companies, through a separate bank, a move aimed at easing sharp volatility in the forex market.
State-run oil firms are the main buyers of dollars in the market and providing a separate window for them is an attempt at reducing pressure on the rupee, analysts said.
The measures are the latest undertaken by the RBI in recent months to try to halt the fall of the rupee, Asia’s worst-performing currency this year, which has lost around a fifth of its value against the dollar since the start of 2013.
India’s rupee crashed on Wednesday on worries about a US-led military strike against Syria and surging crude oil prices fanned fears of a financial crisis.
Analysts fear the sharp rise in global crude oil prices will worsen energy-import dependent India’s already record current account deficit – the broadest measure of trade.
The deficit hit a record $88bn (£56.74bn) last year but the government has said it will cut it to $70bn (£45.13bn) this year.
Other emerging market currencies, like the rupee, have been hit by foreign fund outflows, with the Federal Reserve expected to wind down its stimulus scheme as the US economy recovers.
The rupee’s woes have heightened economic challenges which the government faces – failure to move fast enough on economic reform, decade-low economic growth, a string of government graft scandals, perceptions of policy paralysis and the current account deficit, analysts say.
