Rupee recovers after RBI intervenes

The central bank reportedly sold dollars via public sector banks

After weakening about than 80 paise in early trade, the rupee staged a recovery against the dollar after the central bank reportedly sold dollars via the public sector banks.

The rupee opened weak today ahead of crucial economic growth data to be released later in the day. The government will release GDP growth figures for the first quarter in the evening. GDP growth for 2012-13 was at a decade low of 5%.

After slipping to 67.20/dollar, the rupee strengthened to 66.80 after RBI intervention. Yesterday, the rupee closed at 66.60/dollar -- a 3.2% gain over its previous close. At 10.45 am, the rupee was trading at 66.90/dollar, with the BSE Sensex also rising 200 points from its previous close.  

The sharp weakening of the rupee earlier this week has prompted RBI to open separate dollar window for oil companies, which took away some pressure from the Indian currency.    

Yesterday, RBI governor D Subbarao dismissed the US Fed's QE3 tapering theory for rupee sharp fall and said high current account deficit was one of the key reason for the currency's weakness.

CAD -- which was at historic high last fiscal when it widened to 4.8% of the GDP -- was above the central bank's comfort level for the last three years and Subbarao expects it to be higher than 2.5% (RBI's tolerance level) in this fiscal too.