Rupee crisis: Top 10 steps taken to support the currency
NDTV | Last Updated: August 30, 2013 13:30 (IST)
As the rupee edged closer to the 69 mark against dollar yesterday, the RBI announced fresh measures to shore up the currency.
Here are the steps taken to support the rupee
The Reserve Bank of India (RBI) will provide dollars directly to state oil companies in attempt to support the rupee that has slumped over 20 percent this year. State-run companies are the biggest source of dollar demand in markets - worth $400 million to $500 million daily - and directing them to a special window is meant to reduce pressure on the rupee.
The government will soon issue quasi-sovereign bonds to help bring more dollar inflows into the country. Under the scheme, state finance companies will sell these bonds to fund infrastructure development.
The RBI will sell Rs 22,000 crore bonds every week to check the volatility in forex market.
The government has hiked the import duty on gold and silver to 10 percent to rein in the imports. The RBI has tightened the norms for gold imports by linking them to exports. Also, credit availability for gold imports has also been tightened.
The RBI has reduced the amount of dollar resident Indians can take out of the country from $2,00,000 to $75,000 in a financial year. Indian companies have to seek RBI's permission if they want to invest any amount beyond their net worth abroad. Earlier, a company could invest as much as four times its net worth in an overseas venture.
PSU oil companies would be allowed to raise additional funds - $4 billion - through external commercial borrowings (ECBs).
In a bid to attract NRI deposits, the RBI liberalised bank deposit schemes and some banks raised rates for overseas Indians this month.
To spur banks to attract more dollar deposits from NRIs, the RBI has exempted these deposits from cash reserve ratio and statutory liquidity ratio requirements.
The RBI has tightened liquidity to reduce the availability of rupee in the banking system to reduce rupee volatility. However, these measures have led to an increase in the short-term interest rates.
The government has banned the duty-free import of flat-screen televisions to stem the flow of foreign currency out of the country. It is estimated that more than 1 million television sets were brought into the country last year. Under the new rules, airline passengers will have to pay a 35 percent duty and other charges.
Story first published on: August 29, 2013 09:15 (IST)