India Central Bank unveils fresh steps to contain currency volatility
2013-08-09 17:08:00
India's central bank unveiled more measures late Thursday to contain the currency volatility as previous actions were insufficient to prop up the rupee.
The Reserve Bank of India plans to sell INR 220 billion short-term cash management bills every Monday. It will issue INR 110 billion each of 35-days and 34-day bills.
The results of the auctions will be announced on the same day. The new step that is intended to absorb cash from the financial system is likely to lift bond yields.
The Indian rupee recovered against the dollar subsequently, recapturing a significant 1.8 percent gains from Tuesday's fresh all-time low of 61.81 to settle at a 1-week high of 60.6795.
The RBI last month raised a couple of interest rates to tackle the continuing slide in rupee. The bank increased the bank rate and the marginal standing facility to 10.25 percent each from 8.25 percent. It also conducted open market sales of government bonds to suck up cash from the system.