Rupee hits an all-time low despite RBI measures
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The rupee on Friday hit an all-time low of 62 versus the US dollar. The India currency fell after appreciating in the early morning trade. The fall comes despite, RBIannouncing stern measures to curb forexoutflow amid weakening of the US currency overseas.
The Reserve Bank on Wednesday reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under the automatic route from 400 per cent of net worth to 100 per cent to curb forex outflow. Oil India and ONGC Videsh are exempt from this limitation.
RBI lowered overseas remittances by locals to $75,000 a year from $200,000, and prohibited investments in overseas property, dashing wealthy Indians' dreams of owning homes abroad. However, those in genuine need of foreign exchange beyond $75,000 per year could apply to the central bank for permission.
Meanwhile, The S&P BSE Sensex snapped its four-day winning streak and plunged over 400 points in mid-morning trade to trade below its crucial psychological support level of 19000.
Following the weak momentum, the 50-share Nifty index slipped below its crucial psychological level of 5650.
At 09:50 a.m.; the 50-share index was at 5,624.20, down 117 points or 2 per cent. It touched a high of 5,716.60 and a low of 5,610.20 in early trade today.
The S&P BSE Sensex was at 18,977.32, down 401 points or 2.02 per cent. It touched a high of 19,310.95 and a low of 18,951.87 in trade today.
Defending the steps, Finance Minister P Chidambaram told ET NOW there was no intention of bringing back capital controls. "RBI's measures are not to be understood as capital control. The announcement preserves the right of a corporate to go to RBI and seek approval in case it wants to take out more than 100% of net worth. These are temporary measures and I am sure RBI will revisit them at an appropriate time," Chidambaram said.
"These measures are to create a stable policy environment for rupee," Arvind Mayaram, secretary, department of economic affairs, told reporters on Wednesday evening. "When the rupee finds its level, these could be reversed," he added. (Economic Times)
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