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RBI announces more steps to arrest fall of rupee

The Reserve Bank of India (RBI) Tuesday announced more steps to curb slide in the value of the rupee, that has lost almost 10 percent of its value in the past two months.

The RBI announced measures to further tighten liquidity in the banking system that will help stabilise the falling rupee. 

"Over the last two months, the Reserve Bank of India has undertaken several measures to contain the volatility in the foreign exchange market. Among them, some measures intended to check excessive speculation adding to undue volatility in market conditions," the RBI said. 

"These measures have had a restraining effect on volatility with a concomitant stabilising effect on the exchange rate," it said. 

The RBI said that based on a review of its earlier measures, and an assessment of the liquidity and overall market conditions going forward, it has been decided to modify the liquidity tightening measures. 

The new measures include overall limit for access to liquidity adjustment facility (LAF) by each individual bank is set at 0.5 percent. 

This will come into effect from July 24 and will remain in force until further notice, the RBI said. 

"Currently, banks are allowed to maintain their Cash Reserve Ratio (CRR) prescribed by the RBI on an average daily basis during a reporting fortnight, with a minimum of 70 percent of the required CRR on a daily basis," it added.

"Effective from the first day of the next reporting fortnight i.e., from July 27, 2013, banks will be required to maintain a minimum daily CRR balance of 99 percent of the requirement," RBI said.