For the third time in less than a week, the Reserve Bank of India (RBI) intervened to shore up the rupee and asked exporters to convert half of their export earners? foreign currency (EEFC) account balance into domestic currency. Market participants said the rupee, which closed 42 paise or 1.6% up against the dollar, could still come under pressure as structural issues continue to cloud the domestic economy.

Speaking independently in Delhi, chief economic adviser in the finance ministry Kaushik Basu made a case for continued RBI intervention: ?Rupee volatility is a concern. We are watching it.? He said some of the movement in the rupee is speculative ?and those have to be watched very, very carefully by the RBI?.

On Wednesday, the rupee had slipped by 1.36% to 53.82 to its lowest close after December 12, 2011. The rupee?s weakness has neutralised the advantage from a drop in international oil prices to $110 a barrel. In rupee terms, the price of crude has risen by R95 per barrel.

Commenting on whether the rupee will stabilise at a higher value, Axis Bank chief of treasury operations Partha Mukherjee said the action has to be on the government front as the RBI can only do so much.

The changes brought in by RBI for exporters mean half of their balances in the EEFC accounts must be converted within a fortnight to rupee balances.

Residents with foreign currency accounts and diamond dollar accounts too will have to fall in line. Informal estimates said the move will release about $2.5 billion into the economy.

The apex bank also fixed a limit for intra-day trading of foreign currency by banks at five times their overnight limit. The RBI action is also triggered by the fact that its forex balance is about $295 billion while the trade deficit for 2011-12 has reached $ 185 billion.

The rupee’s rebound after these measures was on expected lines. The currency ended the day at 53.43. ?I think the action was very timely and strong. These measures should help and it looks like well thought-out,? said Ananth Narayan G, regional head, fixed income, currencies & commodities, South Asia, at Standard Chartered Bank.

Kaushik Basu said some amount of correction in the value of rupee was inevitable. He said over the last 10 years, rupee has seen an inflation of about 10% while the dollar has faced only 2%. This means the rupee is losing value against the dollar that happens during episodes like these.

Latest RBI data show that in real terms based on a basket of 36 currencies, the rupee was undervalued by 6.60% in April. On Thursday, as the rupee rose slightly, gold prices fell marginally.

The currency’s fall to all-time lows in December had also triggered a host of measures by the RBI.

The RBI’s official word on its foreign exchange policy has been that it does not target any level of exchange rate but intervenes only to check volatility.

?They have intervened at higher levels consistently and yesterday’s record low could also have triggered some alarm bells,? said a senior dealer at a foreign bank.

The central bank sold $550 million in March to stem the rupee’s sharp fall, the RBI’s latest bulletin showed. In all, the RBI has sold over $17 billion in the forex market since December.

The latest RBI move will bring in about $2-3 billion over the next two weeks, market participants said. However, despite the measures taken by the RBI over the last six months, market participants said further depreciation of the Indian currency could not be ruled out.

?Structural issues remain. Forex flows are stuck and people are questioning the India growth story. I think for now, the previous high in dollar/rupee should hold,? said Ananth Narayan of Standard Chartered Bank.

?This might temporarily strengthen the rupee but overall, market participants have got a clear signal that rupee sentiments will remain weak in medium term,? said Abhishek Goenka, founder and CEO, India Forex Advisors.

In April, gold imports fell 33% while the trade gap narrowed to $13.4 billion. Market participants said the data augur well for the current account deficit.

Moreover, dollar inflows through external commercial borrowings and foreign direct investment remain robust. ?There are significant inflows coming in through ECBs and deposits, which have kept the rupee in the 52-53 band,? said Barua.

After the RBI hiked the ceiling on foreign currency deposits of non-resident Indians, most banks have hiked rates on such deposits.

Data from the RBI showed that companies raised a total of $35.96 billion in 2011-12, 39% more than what they raised in 2010-11.