foreign investors about the impact of the US Fed's likely pull-back of quantitative easing on global liquidity and risk appetite.
Fed Chairman Ben Bernanke had said in May and June that the central bank would start reducing its monthly asset purchase programme by December and completely wind up by mid- July next year.
Market analysts are waiting for the September 18 meeting of US Fed to get some clarity on the timing when the third round of quantitative easing will be rolled back.
"The Fed's meet would perhaps bring more clarity. As uncertainty fades and growth prospects shape clearly, the rupee is expected to revert and stabilise at 58-60 levels by the end of the fiscal," Care Ratings said in a note.
The Reserve Bank of India (RBI), beginning mid-July, unveiled unconventional measures to tighten liquidity and curb speculation in forex market.
Yesterday, Finance Minister P Chidambaram had said the CAD is showing improvement. "...CAD is narrower. We are exploring structural measures to further reduce CAD to sustainable levels and, in the mean time, to improve capital flows," he had said.
Outgoing RBI Governor D Subbarao had yesterday said, "we have structural CAD problem and that requires a structural response but structural measures by definition take time to play in and get the decisive results."