Concerned over the declining rupee, which fell to an all time-low of Rs. 57.37 a dollar, finance minister Pranab Mukherjee on Friday said that the government and the Reserve Bank will take steps to arrest the slide of the Indian currency.
"I have asked the DEA Secretary to discuss rupee situation with RBI deputy governor. DEA Secretary will take step to contain Rupee slide," Mukherjee told reporters.
In order to contain exchange rate volatility, the RBI has asked oil marketing companies (OMCs) to purchase half of their dollar requirement from the State Bank of India (SBI).
The rupee fell to 57.37 against the US dollar on Friday, recording this year's biggest fall of 85 paise in a day, on increased demand from oil importers.
The currency has declined over 20% in the past one year and traders expect the currency to weaken further to 58 against the dollar in future.
Besides the RBI directive, the government has been taking supportive measures to encourage flow of foreign exchange into the country, finance secretary RS Gujral said.
The RBI feels that oil firms seeking a single quote for their dollar requirement, instead of the present practice of floating enquiring with several public and private sector banks, would help check volatility and arrest the free-fall of the rupee.
"Government (is taking) action in terms of supportive measures for ensuring higher inflows of foreign exchange... government is conscious of (situation) and is taking appropriate action", he said, adding the exchange rate is market determined.