Rupee climbs to 65.69 against dollar on RBI steps

Fresh measures by the Reserve Bank of India (RBI) to stem the rupee's slide strengthened it by a hefty 138 paise to trade at 65.69 against the dollar on Thursday.

With Raghuram Rajan taking over as the 23rd governor of the RBI, the stock market responded with a bearish rally.

A little after 11 a.m., the S and P Sensex of the Bombay Stock Exchange(BSE) was trading just below 19,000.

IT stocks were hit quite badly on profit booking and rupee appreciation. Infosys and TCS fell 2.6 percent each while Wipro lost one percent.

Experts said that the overshooting rupee may see some stability in the near-term and reduce panic in the market, but may falter again on strong U.S. jobs data.

According to them, the market expects Rajan to ease interest rates, which he won't do just yet.

They said that they expected Rajan to first see what the U.S. Fed does first and then take it from there.

The Sensex and Nifty lost a percent each,as investors used the Rajan effect to book profits at higher levels.

The BSE Sensex was up just 374 points at 18938, while the Nifty was up 122 points at 5570.

Experts have welcomed Rajan's measures to prop up the rupee and instill confidence in the markets.

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Rajan has raised hopes of a new approach to the current crisis.

Rajan also said the RBI will offer a swap window to banks for fresh dollar deposits mobilised from non-resident Indians, which will be available to lenders till November 30, 2013.

Other measures disclosed to support the rupee include liberalisation of the financial market by enhancing the limits for exporters to re-book cancelled forward exchange contracts and opening a special concessional window for swapping foreign currency non-resident (FCNR) deposits and dollar funds.

Expectation that Rajan will usher in more reforms in the financial sector also added to the upbeat sentiment for the stocks.

On Wednesday, Rajan said the measures announced were just part of his short-term time table and added that a broader road map will follow soon.