RBI measures prop up Rupee, closes up 42 paise

Mumbai: The rupee today rose by a whopping 94 paise to trade below 52 level intra-day after a string of actions by RBI, but only to pare some of the gains to close at 53.42 against dollar. The rupee had a weak opening after closing at all-time low of 53.84 yesterday. It rose to 52.90 level intra-day as there was increased selling of dollar by banks and exporters following RBI measures.

Treasury managers in banks said there was also suspected intervention by RBI in the forex market. However, the domestic unit lost some of the gains and finally settled at 53.42, up by 42 paise over the previous close. "Initially, there seemed to be some kind of intervention from RBI, which we heard from the market. After that the notification regarding the Exchange Earners` Foreign Currency Account (EEFC) came, which lifted the currency," T S Srinivasan, GM (Treasury) of Indian Overseas Bank, said. Talking about near-term outlook, he said that 54 level would act as strong resistance level going ahead.

In order to arrest the declining value of the rupee, RBI today asked exporters to sell 50 per cent of their retained foreign exchange earning. The central bank has also fixed limit for intra-day trading of foreign currency by banks. P Rajaram Karanth, GM (Treasury) of Corporation Bank said, "There was some kind of intervention from RBI in the morning .. EEFC circular helped in arresting the weakness in the domestic currency," he said.

"As there will be net addition of around USD 2.5 billion in the system in a fortnight due to EEFC measures, I hope, breaching Rs 54 level seems difficult in the near-term." On RBI steps, India Forex Advisers chief executive Abhishek Goenka said, "With this, the RBI is clearly indicating that it does not want to sell the dollar to support the local unit but it prefers policy level actions."