Date:18/09/2008 URL: http://www.thehindu.com/2008/09/18/stories/2008091856641700.htm

Business

Rupee recovers 55 paise

MUMBAI: Buoyed by the various measures taken by the Reserve Bank of India to ease liquidity crunch in the exchange market, the rupee bounced back and closed stronger by 55 paise against dollar at 46.34/35 on Wednesday amid consistent strong demand for the dollar, which has pushed the local currency below 46-mark for the first time in two years.

The apex bank on Tuesday hiked the maximum interest on non-resident Indian deposits by 50 basis points for dollar and rupee to pave the way for increased inflow.

The RBI also decided to allow banks to borrow more by relaxing the statutory liquidity ratio (SLR) and expanded the liquidity adjustment facility scheme.

In response to the RBI move, the rupee resumed stronger at 46.38/40 a dollar from Tuesday’s close of 46.89/90 and later moved in a range of 46.25 and 46.70 during the day as demand for dollar petered out amid some dollar selling. The rupee sentiment was also boosted on fears that the central bank would intervene in support of the local currency. either directly or through state-owned banks. — PTI