After days of declines, the Indian rupee gained nearly 2% against the US dollar on Friday. At 0902 hours, it traded at 52.60 against the dollar, gaining nearly Re1 from previous close. The rupee had hit an all-time low, breaching the 54 mark against the dollar yesterday.
The sharp gains came after the Reserve Bank took some measures to stop the rupee fall.
The central bank has cut net overnight, intra-day open forex positions for banks, which will reduce speculative positions. It has said that foreign institutional investors (FIIs) and companies cannot rebook cancelled forward contracts. This will reduce volatility from frequently changed contracts.
Overnight, the euro rose against the dollar, moving back above $1.30, a day after hitting an 11-month low.
The RBI has also reduced the limit for forex hedging based on past performance. This could be a negative for corporates as it reduces ability of companies to hedge.
As per reports, the steps taken by the RBI will certainly halt the slide in the Indian currency.