Rupee Rebounds As New RBI Norms Check Volatility.

Mumbai, Dec 16 (IANS) Helped by fresh guidelines unveiled by the Reserve Bank of India, the Indian rupee rose in Friday trade on fresh selling of dollars.

The rupee rose to 52.21 a dollar in early trade, climbing from the 53.52 level it had closed Thursday. Around 2.40 p.m. Friday, the rupee was trading at 52.82 to a dollar.

The central bank had issued norms imposing restrictions on forward trading in the currency and limited the exposure of banks in the forex market.

As per Thursday's closing, the Indian currency had lost close to 20 percent against the dollar as the economic crisis in the western world resulted in investors flocking towards the US greenback.

An increasing gap between India's exports and imports also put further pressure on the local currency. Policymakers said the widening current account deficit, which is the difference between a country's imports of goods, services and its exports, was making managing the currency a nightmare.

In the past four months the value of imports had started to outweigh exports. The current account deficit has widened to over 3 percent of the gross domestic product.

'While the Indian economy faced excessive capital inflows in the aftermath of the global crisis leading to appreciation of the domestic currency, with the unfolding of the Eurozone crisis, the matter of concern at present is reversal in such flows leading to increased currency volatility,' said Finance Minister Pranab Mukherjee Thursday.

Source : news.in.msn.com