Rupee weakens to 60.83 against dollar

The Indian rupee weakened to 60.83 on Wednesday dashing hopes of a sustained recovery after yesterday's dramatic rebound. The partially convertible currency traded at 60.75 as of 12.08 p.m. against Wednesday's close of 60.40.

The rupee closed higher yesterday after recovering from a near-record low hit earlier in session, as policy makers pledged renewed efforts to defend the currency, while traders also cited RBI intervention.

Finance Minister P Chidambaram suggested the government was considering options, including bringing in more foreign inflows, in a bid to narrow a record high current account deficit which has been a key factor in the rupee's weakness.

RBI Governor D Subbarao dispelled some of those doubts on Wednesday, saying the central bank would stick to its defence of the rupee until exchange rates stabilise, and easing uncertainty just a day earlier after his remarks about a potential rollback of cash-draining steps led the rupee to fall 1.8 percent.

Traders also cited dollar sales from the central bank on two occasions to prop up the rupee.

The rupee has slumped 1.7 percent for the month, its third successive month of losses, even after the Reserve Bank of India unveiled steps to defend the currency by draining cash, as the efficacy of the moves were put into question by doubts about the central bank's resolve.


(With inputs from Reuters)