India's Central Bank in new measures to boost rupee

India's Central Bank has taken new measures to reduce volatility in currency markets and support the weakened rupee.

The Reserve Bank of India (RBI) said it will auction 220bn rupees ($3.6bn; £2.3bn) of government cash management bills every Monday. It did not say how many weeks the sale would go on. The rupee hit a record low of 61.80 against the US dollar on Tuesday.

Other measures have so far failed to shore up the currency. The rupee has lost more than 12% of its value since the start of the year, because of investors taking money out of the country, among other reasons.

On July 15 the RBI took action, including raising short-term rates to reduce cash in the financial system. It took additional steps on July 23. However, the rupee has continued to drop in value, raising concerns about India's economy which is growing at 5% - its slowest pace in a decade.

Economists said it was a good step but that reforms were needed to boost the economy. The “measures are an effort to siphon off excess liquidity from the system and will help the rupee,” said chief economist with private Yes Bank, Shubhada Rao. “But liquidity tightening measures are not enough. Growth will have to become a priority,” she said.

BBC