The Indian currency jumped over 2 percent against the U.S. dollar and the BSE Sensex surged around 550 points after the new Reserve Bank governor Raghuram Rajan announced a spate of measures to save the falling rupee.
The Indian currency jumped over 2 percent against the U.S. dollar and the BSE Sensex surged around 550 points on Thursday after the new Reserve Bank governor Raghuram Rajan announced a spate of measures to save the falling rupee.
As reported by NDTV, traders and analysts were optimistic that Dr Rajan will unveil a new strategy for the rupee, which plunged 20 percent this year. They had expected the 50-year-old academic and celebrated economist to do his homework, but had not expected him to detail so comprehensive a plan.
The rupee opened higher and was recorded Rupees 65.54 per dollar in early morning trade. This sharp gains in rupee prompted buying in banking stocks, which were the most affected since the rupee started slipping.
The Sensex traded 383 points higher at 18,950, while the Nifty traded 125 points higher at 5,573 in the morning trade.
In his first address, Dr Rajan had outlined plans to attract more funds from overseas to support the rupee. He said the RBI will attract more funds from non-resident Indians (NRIs) as part of a broader push to lure inflows. Under the plan, the central bank will offer a swap window to banks for fresh dollar deposits mobilised from non-resident Indians.
He added that the central bank will also offer forex swap into rupees at a concessional rate below market levels for banks that raise dollar funds through overseas borrowings.
Now, how much of hope will be sustained will be known on September 20, when the Reserve Bank will make a policy statement.