The rupee, which closed at a record low on Wednesday, ended a three-day losing streak even as the dollar strengthened overseas and capital outflows continued. Fresh dollar sales by exporters on expectations of a further rise in the rupee also helped the local currency.
The RBI said on Wednesday night that PSU oil companies could buy dollars through a special swap window effective immediately. Indian Oil, Bharat Petroleum and Hindustan Petroleum are the biggest buyers of dollars, requiring about USD 8.5 billion every month to import an average 7.5 million tonnes of oil.
"The decision is aimed at removing a major source of dollar demand from the spot market," said Abhishek Goenka, CEO of India Forex Advisors. "The sustainability of this measure will be closely watched as the central bank had taken a similar measure in 2008, which provided short-lived relief."
Bank of America Merrill Lynch said in a report on Thursday that the RBI will have to take far more pro-active steps to rebuild forex reserves, because if the status quo remains, the rupee could touch 75 per dollar by the end of 2014.
At Interbank Foreign Exchange Market, the rupee opened at 66.90 to a dollar from the previous close of 68.80 and fell to a low of 67.92 on dollar demand from importers. It bounced back to 66.51 before ending at 66.55, a rise of 225 paise or 3.27 percent.
The rupee's recent decline cast a shadow in Parliament on Thursday, with Opposition parties saying that there is a state of panic in the country. Prime Minister Manmohan Singh also conceded that the country is facing a ‘difficult’ economic situation and said that he would make a statement on Friday.


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