MUMBAI: The rupee gave up all of its 1.2 percent gain and slipped back to above 57 levels. The Indian unit started the day strong after Finance Minister Pranab Mukherjee on Saturday gave hopes to the market of many measures that RBI and the ministry were working on to support the falling rupee and to boost economic growth. The rupee declined 3 percent the previous week to touch record lows at 57.32 and it seems to be headed there again as the RBI disappointed markets on the quality and quantity of measures. The central bank increased the limit on foreign investment in government bonds by $5 billion to $20 billion. Other measures included a reduction in lock-in restrictions on some government bonds for foreign investors, and the opening of investment in debt securities to more types of foreign buyers. The central bank also modified the lock-in periods for foreign investment in infrastructure debt, but stopped short of giving details on it. The steps may be in the right direction but what the markets and rupee needed was an immediate booster, which the RBI did not provide. The RBI now may have to come out with a new set of measures apart from this to tackle the situation and to improve the business climate by encouraging inflows and narrowing trade deficits. In the meanwhile, the rupee faces pressure from the euro and other high-yielding currencies trading negative on global risk aversion.

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