RBI Governor, D Subbarao admits banks need relief on reserve requirements to ease liquidity
Rupee has continued to slide, ignoring all measures taken by the FM
RBI recently tightened monetary conditions by raising short-term interest rates and draining cash in a bid to defend the rupee
Dollar's gain against the yen put pressure on the rupee
Despite central bank's sale of over $2 billion, rupee weakened by 5% in June
RBI announced more measures to support the domestic currency
India has $280 billion of foreign exchange reserves, that is only enough to cover seven months of import bills
The long end of the market should remain relatively stable as policy action is increasingly putting thrust on the shorter end of the curve
Govt promises more steps to woo foreign inflows to help partly fill large current account gap
In the week ending July 26 foreign exchange reserves had recorded a rise of $960.2 million to $ 280.16 billion
Rebound in local equities, a weak dollar overseas and fresh dollar sales by exporters also aided the rupee
Domestic forwards markets, which reflect market expectations, see the rupee trading at around 65 to the dollar in a year
Investors had initially worried the dividend payout would have eased liquidity, raising concerns that the central bank would have to resort to new measures to drain cash
Dollar selling by exporters and banks helps rupee recoup
The currency was also dragged lower by indications that the US Federal Reserve would taper its bond-buying programme
The worst performing Asian currency of the year so far hit a new life low of Rs 61.80 per dollar on Tuesday
Crucial FSDC meet in afternoon to discuss exchange rate, CAD