India Announces Measures to Tackle Falling Rupee
India on Monday 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.
The rupee, which has depreciated more than 10 per cent since April, fell to INR56.8 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 INR57.32 last week.
The RBI on Monday 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 per cent in January to March, its slowest quarterly expansion in nine years.
Indian shares were down 0.57 per cent at 16,876.39 in late Monday afternoon trade.