Govt-RBI pep talk lifts Rupee by 135p per $

In a strong comeback, the rupee soared by 135 paise to end at 63.20 against the dollar on Friday as the Reserve Bank of India (RBI), the country’s central bank, intervened heavily in the foreign exchange market on the back of an array of soothing statements from Finance Minister and Harvard Business School alumnus P Chidambaram. Shares, too, jumped to a one-week high on what proved to be an extraordinary day for the markets.
The currency and stock markets got a booster dose after Chidambaram ‘s comments that there are no plans to control capital outflows. RBI Governor D Subbarao had also said the country has enough reserves to meet the current situation. Friday’s gain in rupee is the second-biggest in a decade.

Experts forecasts the rupee will strengthen further to 60-61 levels by March as the current account deficit narrows and capital inflows are boosted by recent steps. A strengthening rupee cuts the risk of price rises as the cost of importing oil and gas is lowered. However, gold prices fell by Rs 200-330 in major metros except Chennai. In the bond markets, the 7.16 per cent government security maturing in 2023 fell to Rs 92.70 from
Rs 92.88 Thursday, while its yield inched up to 8.26 per cent from 8.23 per cent.