Rajan's first few measures include swap window facility for banks to lure in NRI funds and reversal of some of the controls that his predecessor Governor D Subbarao had introduced. Also, the August 31 meeting, which was held by economic affairs secretary Arvind Mayaram and banking secretary Rajiv Takru with foreign banks, who control the domestic forex market, had a positive impact on the rupee, say analysts.
     
"The rupee will continue to be strong. It was already in the overshoot turf. The measures announced by the RBI have come as a catalyst," said Harihar Krishnamoorthy, treasurer at the South African lender FirstRand Bank.
     
Rajan, after taking over from D Subbarao on September 4, has announced a slew of measures to attract inflows from overseas investors, including the NRIs.  To boost foreign fund inflows and help banks get funds at cheaper rate, Rajan announced a special window to swap foreign currency non-resident (FCNR) dollar funds mobilized by banks.
     
The RBI also doubled the re-booking amount that exporters can do on their cancelled forward contracts to 50 percent from 25 percent. It also extended the facility to importers who were not allowed to re-book their cancelled forward contracts.
     
Further, it restored the permission to invest 400 percent of a domestic corporate's networth in foreign market provided it has raised the funds through external commercial borrowing (ECBs) route.
     
The measures announced by Rajan were well-received by the markets with the rupee recovering by 3.5 percent between September 3 and 6. Last Friday, the rupee closed up at 65.24 while the Sensex rallied more than 1,000 points in three days to Friday.
     
Another positive rub-off will be the less than expected jobs data from the US, as it is expected that the Fed will hold more signals to go ahead with its tapering, which is scheduled to begin from November.

(Agencies)

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