FM likely to unveil more measures to stem rupee slide

Finance Minister P Chidambaram is likely to unveil next week more measures to support rupee which had hit all-time low of 61.80 against dollar, a top official hinted today.

"I think you should wait till the end of the week the Finance Minister will be talking about this later," Economic Affairs Secretary Arvind Mayaram told reporters in reply to a question.

He was asked whether the government would come out with more measures to support rupee.

Meanwhile, the rupee today recovered from all-time closing low, adding 42 paise to end at 60.88 amid expectations the government would announce fresh steps to support the local currency. It had closed a record low of 61.30 against dollar yesterday.

Earlier on August 6, the domestic unit had tumbled to life-time low of 61.80 intra-day.

RBI has taken slew of measures in the past couple of weeks to contain rupee depreciation. The currency has lost 12% since April this year due to sustained capital outflows.

The burgeoning current account deficit, which touched all-time 4.8% during last fiscal, is also weighing heavily on the local currency.

The decline of the rupee to previous record low of 61.21 against the dollar on July 8 prompted the RBI to take a series of unconventional measures to curtail liquidity and curb speculation.

On July 15, the Reserve Bank put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25% and restricting access by way of repo window to Rs 75,000 crore.

On July 22, the RBI rationalised import of gold by making it incumbent on all nominated banks to ensure that at least one-fifth of the imported metal is exclusively made available for the purpose of exports.

A day later, the RBI directed banks to draw only 50% of their total deposits in overnight borrowings and maintain a 99% average cash reserve ratio everyday.

Reserve Bank also tightened hedging rules by making it mandatory for FIIs to obtain consent of holders of participatory note (P-Note) and derivative instruments before hedging.