bank of India announced measures to protect the rupees against the dollar

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The Rupee has hit a record all time low against the dollar for the fifth straight session today. The Rupee has been weakened by a high demand for the dollar and weak global risk sentiment exacerbated by the downgrading of Japans credit rating.

The Reserve bank of India has announced a string of measures aimed at curbing the rupees continuing freefall against the dollar. So far all of the action the bank has taken has proven to be unsuccessful; many traders said that the plans were too small to prove affective.

The ongoing Euro crisis is not helping the situation as the continuing uncertainty in the region threatens to spread across the globe.

The rupee fell to an all-time low of 55.47 per dollar, before closing at 55.39/40, compared to its Monday close of 55.03/04.
Although the rupee is now well below the key psychological level of 55 to the dollar, the RBI has refrained from intervening even as NDFs point to further falls. The one-month NDF closed at 55.86 on Tuesday while the three-month ended at 56.60

Some traders have said that the market has become too volatile because of the worsening global environment and the RBI’s presence would only add to that volatility.

However, analysts still left open the possibility of surprise measures, probably in the form of direct dollar sales to oil importers or some type of sovereign bond issuance, adding the RBI or the finance minister would need to adopt big measures to stop the rupee’s falls.

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