Rupee still falling despite RBI intervention

According to banking sources,if the rupee crosses the 54-54.50 levels,the RBI is likely to come out with administrative tools like those it introduced in December after the rupee had hit a record low of 54.30.

On December 16,the RBI reduced the overnight open dollar positions for banks across the board and also curbed the extent to which exporters and importers can cancel and rebook their hedges or forward contracts in a bid to salvage the rupee.

The RBI has not been able to do much because of Indias relatively low foreign exchange reserves and a widening current account deficit aggravated by foreign capital outflows.

Any further intervention would also worsen an acute liquidity shortage that has seen repo borrowings surge for seven consecutive sessions.

On Thursday,the RBI stepped in to defend the currency via dollar sales for a second consecutive session,which helped slow the pace of falls.

Foreign fund inflows,critical to bridge the countrys current account gap have been drying up. Net portfolio outflows stood at 540 million over the last two months compared with 13 billion inflows in January-February.

Gold scales new peak
MUMBAI: Continuing its record-breaking journey,gold scaled a new peak and inched closer to the Rs 30,000 level at the bullion market here on consistent buying from stockists and investors supported by firm jewellery demand. Standard gold 99.5 purity finished at Rs 29,310 gm and Pure gold 99.9 purity closed at Rs 29,445 per 10 gm.

ENS

Sensex tumbles 151 points
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FE