Fast News

The rupee fell past 64 to the dollar for the first time on Tuesday before the RBI stepped in to support the currency. The sustained dollar sales in both the spot and forward markets helped rupee to recover most of its losses to close at 63.25/26, down by about 0.2 percent. The apex bank's suspected intervention on Tuesday came after it was largely seen as staying away during the rupee's rout on Monday. Later in the evening, the RBI announced steps to comfort the government bond market after a sharp spike in long-end yields following its recent cash tightening steps to support the rupee. The RBI said it will buy long-dated government bonds worth 80 billion rupees through an open market operation on August 23 and thereafter decide on the amount and frequency as warranted. The RBI also relaxed rules for banks on their mandatory bond holdings, known as the statutory liquidity ratio, which will help banks protect their bond portfolios from large mark-to-market losses. In contrast to an earlier rule asking banks to reduce their hold-tomaturity bond holdings gradually to 23 percent of deposits, the RBI has now allowed banks to retain those holdings at 24.5 percent of the total.