The rupee fell to 55.72/73 versus its previous close of 55.5850/5950, after the Reserve Bank of India raised its inflation outlook for the fiscal year 2012/13. The outlook by the RBI has cast doubts about the timing and extent of future rate cuts.
However, the rupee retreated from a session low of 55.85 after the RBI separately announced it will ease some forex measures that had been seen as too restrictive.
The RBI will allow companies to keep 100 percent of their foreign forex earnings, reversing its previous directive they must convert half their holdings into rupees, while allowing exporters to cancel and rebook some of their forward contracts.
The rupee could see support as oil refiners continue to buy dollars to meet import commitments.
