Rupee drops again; RBI measures prove futile

Business

oi-Sunil

By Sunil Fernandes

Published: Tuesday, June 26, 2012, 12:25 [IST]

The rupee lost ground once again, trading at 56.12 against the dollar, despite a slew of measures announced by the RBI on Monday to prop up the rupee.

The currency dropped 11 paise from Monday's close of 57.01 at 12.30 pm IST. The RBI in coordination with the government announced a hike in the investment limit for foreigners to invest in government bonds by $5 billion and also increased the external commercial borrowing limit.

Further, Qualified Foreign Investors (QFIs) can now invest in those mutual fund (MF) schemes that hold at least 25 per cent of their assets (either in debt or in equity or both) in infrastructure sector under the current USD 3 billion sub-limit for investment in mutual funds related to infrastructure.

The rupee has been depreciating rapidly, as risk aversion across the globe and weakening economic fundamentals have contributed to its downfall.

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