India's central bank stepped in to defend its battered currency, which sank to a record low on Thursday, by selling dollars in the market and reducing trading limits for banks. The two-pronged defence came after the currency hit a series of record lows, with investors and officials piling pressure on the central bank to abandon its hands-off approach to the rupee, which ended off an all-time low hit low earlier in the day.
The rupee has lost more than 18 percent from a July peak, making it the worst performer in Asia. Weakening economic conditions are expected to keep the rupee under pressure in the near-term, given the central bank's limited means and appetite to prop up the currency.
The Reserve Bank of India sold dollars, according to traders, sparking what they said was a slew of stop-losses on long dollar positions by market players who had expected the currency, which had plunged to a record low of 54.30 against the dollar, to hit 55 per dollar. The rupee ended near the day's highs of 53.64/65 per dollar, marginally stronger than Wednesday's close but well above the record low plumbed in early deals.
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