RBI asks exporters to convert 50% of forex into rupees

Exporters can also buy forex only after using all their existing foreign currency holdings

The Reserve Bank of India said exporters will be required to convert 50% of their foreign exchange holdings into rupees, in a move that traders say could boost the sagging local currency.

Exporters will also be allowed to buy foreign currency only after utilising all the foreign currency holdings in their accounts.

The rupee had hit an all-time low of 53.83 to the dollar  on Wednesday and even RBI intervention wasn't enough to stem the currency's decline.

The political upheaval in Greece continued to hurt the sentiment across the world, as political parties haggled over chances of renegotiating the terms of a bailout. The weekend elections in France and Greece had seen voters reject harsh austerity measures.

 

Banks on today sold dollars on behalf of the RBI when the rupee hit the 53.80 levels, which helped the currency recover to 53.70.

However, last-minute demand from importers hurt the currency further. The previous closing low was recorded at 53.72 on December 14, 2011. The currency has depreciated two per cent since the start of this month and 5.8% since April 1.