Indian rupee drops in early trade despite govt steps to check currency depreciation

Mumbai, Sep 17: The Indian rupee weakened sharply on Monday despite government measures to curb the import of "non-essential items" imposed in a bid to reduce India's current account deficit.

The rupee fell 67 paise to 72.52 against the dollar compared to Friday's close of 71.85 level. It went on to reach 72.64 per dollar, down 79 paise later.

The government on Friday announced an array of steps, including removal of withholding tax on Masala bonds, relaxation for foreign portfolio investors and curbs on non-essential imports to contain the widening current account deficit (CAD), which has widened to 2.4 percent of GDP in April-June, and check the rupee's fall against the dollar.

Rupee in the last couple of sessions rose against the US dollar on back of report that the PM is going to hold an economic review meeting during the weekend. In the economic review meeting the finance minister announced some steps to curb the volatility of the currency.

The government plans to take measures to cut down "non-necessary" imports, ease overseas borrowing norms for the manufacturing sector and relax rules around banks raising masala bonds, or rupee-denominated overseas bonds, according to Motilal Oswal report.