Forex dealers said additional tightening measures announced by the RBI on Tuesday night to contain excessive speculation and volatility in the foreign exchange market, supported the local currency.
RBI has reduced the liquidity adjustment facility (LAF) for each bank from 1 percent of the total deposits to 0.5 percent, thus limiting the access to borrowed funds from the central bank.
In another measure to suck out liquidity from the system, RBI has asked banks to maintain higher average CRR (cash reserve ratio) of 99 percent of the requirement on daily basis as against earlier 70 percent. CRR is portion of deposits that banks are required to keep with RBI.
The rupee had lost four paise, to close at 59.76 against the dollar on Tuesday on sustained demand from importers and a rise in the US currency overseas.
Meanwhile, the BSE benchmark index Sensex fell by 75.94 points, or 0.37 percent, to 20,226.19 in morning trade Tuesday.


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