MUMBAI: India's rupee posted its first gain against the dollar in four days yesterday, rebounding from an all-time low on reports that the central bank may consider fresh measures to help the currency recover.
The Indian unit hit 56.36 against the dollar in early trade — its seventh straight record low — but recovered to 55.55 on reports that the Reserve Bank of India had not ruled out selling dollars directly to oil importers.
Such a move would remove a sizable source of demand for the greenback from the market and ease pressure on the weak rupee, dealers said.
The rupee closed Wednesday at 55.96 to the dollar. "I'm not ruling it out (opening a dollar window for oil firms)...we have done it in the past," RBI's Gov. Duvvuri Subbarao told reporters. "I'm also not saying we are going to do it right now. It is an open issue."
The local currency — down 10 percent in the new financial year — has been falling despite several suspected interventions by the central bank, including one yesterday, in the forex markets this year.
The bank has a policy of not commenting on movements in the forex market and any interventions. Domestic problems, including India's widening trade and current account deficits and declining foreign fund inflows, have depressed the rupee, analysts say.
The rupee, also weighed down by global risk aversion, is among several emerging market currencies which are depreciating against the dollar. A declining rupee and high crude-oil prices have exacerbated the current-account deficit for India, which imports up to four-fifths of its oil needs.
India's state-run oil firms on Wednesday announced a steep hike in petrol prices to offset growing losses caused by subsidized rates, rises in the international oil price and the rupee's losses.
FROM: agence france presse
Indian rupee rebounds from record low
