India's Central Bank moves to arrest sliding rupee

INDIA: India's central bank on Thursday announced new measures to stem the recent fall in the rupee, which a day earlier posted its lowest-ever finish against the dollar on growing eurozone concerns.

The Reserve Bank of India (RBI) ordered exporters and other foreign-exchange earners to convert half of their total foreign-exchange earnings kept in banks into rupees.

After ending Wednesday at a record closing low of 53.83 against the dollar, the unit slid to 53.91 on Thursday before clawing back to 53.25 after the RBI announcement.

While Wednesday's closing figure was the rupee's lowest it had ever ended, it hit a record intra-day low of 54.30 against the dollar in mid-December as it rounded off 2011 as Asia's worst-performing currency.

The bank's plans are to be put in place within a fortnight, it said in a statement.

The RBI is thought to have intervened to buy rupees about a dozen times this year as it tried to prevent the currency's slide, although the bank has a policy of not commenting on movements in the forex market.

The partially convertible rupee has been hurt by global uncertainty, weak domestic economic data, slowing overseas funds inflows and pressure from oil importers, who have to exchange the currency for dollars when they buy crude.

Energy-hungry India imports four-fifths of its crude-oil needs to fuel its economy. AFP