The rupee gained 26 paise to 59.50 in early trade at the Interbank Foreign Exchange market on fresh dollar selling by exporters after the RBI announced additional measures to arrest the local currency’s slide. Forex dealers said additional tightening measures announced by the RBI last night to contain excessive speculation and volatility in the foreign exchange market,supported the local currency.
RBI has reduced the liquidity adjustment facility (LAF) for each bank from 1 per cent of the total deposits to 0.5 per cent,thus limiting the access to borrowed funds from the central bank. In another measure to suck out liquidity from the system,RBI has asked banks to maintain higher average CRR (cash reserve ratio) of 99 per cent of the requirement on daily basis as against earlier 70 per cent. CRR is portion of deposits that banks are required to keep with RBI.
The rupee had lost four paise,to close at 59.76 against the dollar yesterday on sustained demand from importers and a rise in the US currency overseas. Meanwhile,the BSE benchmark index Sensex fell by 75.94 points,or 0.37 per cent,to 20,226.19 in early trade today.