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FinMin,RBI to unveil eco booster: Pranab

Investors await measures that are expected to check rupee slide and improve markets.

Written by Agencies | New Delhi | Published: June 25, 2012 12:07:56 pm

Finance Minister Pranab Mukherjee today said his ministry and the Reserve Bank will soon announce certain steps,as investors await the measures that are expected to check rupee slide and improve markets.

“I think notifications are going to be issued. In morning I discussed (those) with Secretary,Economic Affaris (R Gopalan). They are going to issue circular…RBI is going to issue the circular,” he told reporters here.

He said that there were discussions with the RBI Governor D Subbarao also in this regard last week.

The sharp decline in rupee against the US dollar is a cause of concern and there are expectation that steps would be announced to boost the domestic currency.

The rupee,however recovered 71 paise against the dollar at 56.44 in early trade today on selling of American currency by banks amid expectations that RBI may announce steps to boost the local currency.

The economic growth has also fallen to a nine-year low of 6.5 per cent in 2011-12 and industrial output continues to be sluggish with a mere 0.1 per cent growth in April. Inflation too remained at an elevated level of 7.55 per cent in May.

The measures would be announced on a day when global agency Moody’s has retained outlook on India’s rating at stable despite slowdown in GDP growth rate,saying that it is unlikely to be even a medium-term feature.

The measures being discussed include increase in limit of FII investment in government bonds to USD 30-35 billion from the current USD 25 billion,sources said.

Also,a credit line for oil marketing companies (OMCs) for refinancing of dollar purchase from public sector banks and special bonds for non-resident Indians (NRI) to attract foreign currency.

The three big state oil firms need about USD 8 billion every month for import of crude oil and some petroleum products like LPG.

The RBI already has taken a slew of measures to curb the volatility in rupee including requiring exporters to sell half the foreign currency in their accounts and giving freedom to banks to pay higher interest rate on NRI deposits.

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