India announces measures to tackle plummeting rupee

MUMBAI - Agence France-Presse

India decides to raise the foreign investment cap for government bonds to boost the rupee, which fell to record lows against the dollar, and to attract foreign inflows. AP photo

India yesterday announced a slew of measures, including raising the foreign investment cap for government bonds, to boost the rupee that has fallen to record lows against the dollar.

The Reserve Bank of India (RBI), in consultation with the government, unveiled the measures to
attract increased foreign in-flows as the rupee has been hit by India’s slowing economy and global uncertainty. The limit on foreign investment in government bonds would be raised by $5 billion to $20 billion, the RBI said in a statement.

Rupi falls to 56.8 to dollar

The rupee, which has depreciated more than 10 percent since April, fell to 56.8 to the dollar after the announcements due to disappointment over the lack of any “big-ticket” reforms to kick start growth, analysts said.

The currency touched a record low of 57.32 last week.

The RBI yesterday took other measures such as allowing sovereign wealth funds, endowment funds, pension funds and foreign central banks to invest in government bonds.

Once-booming India is suffering from slowing industrial growth, troublesome fiscal and current account deficits and a stalled reform agenda. The economy grew just 5.3 percent in January to March, its slowest quarterly expansion in nine years.

Indian shares were down 0.57 percent at 16,876.39 in late afternoon trade.