The Reserve Bank is pulling all stops in its efforts to defend India’s battered currency. On Thursday it laid out new measures that could help shore up the rupee. Most significantly, it told exporters they would have to sell half of their foreign currency holdings. RBI also allowed banks to take intra-day currency trading positions up to five times their overnight limit. Until Thursday’s announcement, banks weren’t allowed to take intra-day positions greater than their overnight limit. RBI is hoping the move will dampen rupee volatility.
There’s some good news for India’s trade numbers. New figures released on Thursday show the country’s trade deficit is down to its lowest level in a full year. India’s exports in April went up 3.2% to $24.5 billion. Imports meanwhile dropped 3.8% to $37.9 billion. That meant a trade deficit of 13.4 billion for the month. Much of the fall in imports came because of reduced demands for some key commodities. Imports of gold silver fell 33% during April. And demand for petroleum products increased just 7%.
RBI takes sweeping steps to rescue the rupee; India’s trade deficit falls; markets decline for a third day in a row
And finally, Indian markets tumbled for a third session in a row on Thursday, with rupee worries and low global sentiment dragging down the bourses. The Sensex fell 60 points to 16,420. And the Nifty lost nine, to end at 4,966.