India’s Central Bank Introduces New Measures To Boost Rupee

India’s central bank has announced new measures to reduce volatility in currency markets and support the weakened rupee.

The Reserve Bank of India (RBI) said it will auction 220bn rupees ($3.6bn; £2.3bn) of government cash management bills every Monday. It did not say how many weeks the sale would go on.

The rupee hit a record low of 61.80 against the US dollar on Tuesday.

Other measures have so-far failed to shore up the currency.

The rupee has lost more than 12% of its value since the start of the year, because of investors taking money out of the country, among other reasons.

On 15 July the RBI took action, including raising short-term rates to reduce cash in the financial system. It took additional steps on 23 July.

However, the rupee has continued to drop in value, raising concerns about India’s economy which is growing at 5% – its slowest pace in a decade.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza