Rupee snaps losing streak after RBI steps in to calm markets

The Indian rupee gained against the US dollar for the first time in six days, adding 41 paise to close at 63.30, on fresh sales of the US currency by exporters and by state-run banks on behalf of the Reserve Bank of India (RBI).

In the previous five sessions, the rupee had slumped 209 paise or 3.39 per cent.

Seeking to calm the currency markets, the central bank earlier in the evening said the current account deficit (CAD) in 2013-14 will be $56 billion, lower than earlier projections, and that there is no fundamental reason for rupee depreciation.

RBI Governor Raghuram Rajan said the central bank was weighing options to contain exchange rate volatility and would come out with 'appropriate' steps in the future.

"Overall, his speech came as a breather for the weakening rupee," said Abhishek Goenka, CEO of India Forex Advisors.

At the Interbank Foreign Exchange Market, the rupee opened lower at 63.90 and dropped to 63.91 as stocks declined and importers bought dollars. It bounced back on fresh dollar sales by exporters and some banks to a high of 63.28 before settling at 63.30, a rise of 41 paise or 0.64 per cent.

Capital inflows supported the rupee after initial weakness as the dollar strengthened overseas and stocks fell.

The 30-share BSE Sensex continued its slide and closed lower by 87.51 points or 0.43 per cent. Overseas investors bought a net Rs 347.58 crore of shares on Tuesday, according to provisional stock exchange data.

"The rupee appreciated over half a per cent as the Reserve Bank of India is likely to have intervened via state-run banks as rupee was falling further after it opened at a nine-week low of 63.90 against the dollar," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India). "Equity markets continued its fall...which capped the rupee's gains."

The dollar index was up 0.04 per cent against a basket of six major global currencies.

With inputs from PTI