The Indian rupee rallied today as the Reserve Bank of India took measures to support the currency that has been performing very badly. The central bank decrease the amount of foreign currency companies may hold.
The RBI announced that companies may keep only 50 percent of their profits in foreign currency, down from 100 percent, while other half should be exchanged to the domestic currency. This measure should bolster central bank’s dollar reserves. The currency definitely needs support as it has fallen 4.8 percent this quarter
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Indian stocks reacted positively to the central bank’s decision, rising as much as 1.2 percent. Risk sentiment on the Forex market was good, adding to the strength of the currency. Analysts said that the rupee reached a bottom and most negative fundamentals are priced in.
The currency appreciated 1.6 percent today, the biggest gain since December. USD/INR traded at 53.2550 today as of 23:00 GMT.
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