Rupee pulls back to 60.48 on hopes of govt action.

The Indian rupee pulled back sharply against the U.S. dollar on Monday on RBI action and on expectations that the government will unleash new measures to defend the rupee as early as today.

The partially convertible rupee traded at 60.76 as of 10.43 a.m. as against its previous close of 60.88. The currency rose as much as 60.48 against the dollar in early trade.

The government is working on relaxing external commercial borrowings (ECB) norms for corporates as well considering allowing public sector undertakings to issue quasi-sovereign bonds which could fetch foreign exchange, according to media reports.

The government is also considering the report of an inter-ministerial panel for restricting non-essential imports by hiking duties.

These measures are likely to be unveiled this week, reports said.

The Reserve Bank of India (RBI) announced new measures on Thursday to drain cash from the financial system in a bid to address volatility in currency markets, after a slew of steps announced last month failed to prop up the battered rupee.

The RBI will auction Rs. 22,000 crore of government cash management bills every Monday, it said in a statement, without specifying for how many weeks the sales would last.

The measures come after the RBI unveiled measures on July 15, including raising short-term interest rates, in a bid to drain cash from the financial system, and followed up with additional steps on July 23.

Source : profit.ndtv.com