The Indian rupee recovered nearly 49 paise from its fresh record low of 73.4163 against the US dollar amid a buzz that the government was in discussion with the RBI on measures to stem the rupee’s fall. The Indian rupee recovered sharply from record low levels after a wire report said the government was in talks with the Reserve Bank of India for a special dollar swap window with PSU oil refiners and fuel retailers.

Amid higher crude prices and persistent capital outflows, the Indian rupee on Wednesday plunged 50 paise to a historic record low of 73.4163 per US dollar, Bloomberg data showed. The rupee breached the 73/$ mark for the first time today, opening at 73.25 against the greenback. At this low, the rupee is down nearly 15% this year, making it the fifth worst performing currency among the global currencies.

“It is time for the RBI/government to come out with some visible measures. The rupee is in the bottom 5th position as worst performing currency amongst global currencies (approx. 15% fall this calendar year),” Hiren Sharma, Portia Advisory Services LLP, told FE Online. “And the Finance ministry, a while back, stated that it is thinking of having a separate oil window for few retailers and other measures to counter rupee fall. Just the statement enabled the rupee to recoup some of the early losses from 73.41 to 72.92,” he added.

Why did the rupee breach 73/$?

Despite various steps taken by the government to halt the slide, the rupee has been on a downward spiral. According to analysts, crude oil prices continued to guide the rupee’s movements.

“Market has not reacted positively to steps taken by the government for stability in rupee as they were perhaps not strong enough to address the key issue of short-term demand. Most of the Asian and emerging currencies are calmer in past one month,” said Sajal Gupta, Head Forex & Rates, Edelweiss Securities Ltd. “Market is reacting strongly to Brent crude movements and with current pace, 75 can likely be seen if crude touches 88-90 levels,” Gupta said.

Now, with the Fourth Bi-Monetary policy ahead, market participants will be on a close watch on whether the RBI comes up with measures to prop up the rupee. The Fourth Bi-monthly Monetary Policy Statement for 2018-19 will be issued on October 5, 2018.

According to Rushabh Maru – Research Analyst, Anand Rathi Shares and Stock Brokers, there is a buzz of repo rate hike by 25 basis points and a possible change in the monetary policy stance by the RBI. “More importantly, its guidance will be crucial. Market will also keenly watch whether the RBI announces any crucial measures to stabilize the rupee,” said Maru.