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The Rupee has been at the height of conversation this month with regards to money rates as it erased most of its intraday gains on dollar demand from oil refiners on Tuesday 24^th January, this was following hitting a 10 week high, driven by local shares that rose, on expectations the Reserve Bank of India (RBI) will shift its policy towards boosting growth. India’s rupee actually rose past 50 to an American dollar for the first time since November 14^th 2011 as the central bank left borrowing costs unchanged today to support economic growth. The RBI reduced the amount of funds banks must set aside as reserves to 5.5% from 6%, while keeping the benchmark rate unchanged.

Money rates are affected by India’s largest import item, oil and oil refiners which are the single largest buyers of American dollar in the local market, there is a step up of demand of the currency towards the end of every month to meet payment requirements.Traders said comments from the RBI underlined its intent to keep volatility in the foreign exchange market under control. The Reserve Bank took a number of steps to stimulate capital inflows and curb speculation, besides also intervening in the market consistent with its policy of containing volatility and preventing disruptive movements,” according to a policy document issued by the monetary authority today. The bank “continues to closely monitor” external developments and “will take action”, as appropriate

The rupee fell 16% in 2011, the worst performance among Asia’s top 10 most traded currencies. It has regained 6% of its fall this year to be the Asia’s biggest achiever on central bank intervention, regulatory changes and better global risk appetite. Money rates have been effected globally with countries such as Brazil, China, Thailand, Indonesia, the Philippines and Russia have all either cut borrowing costs or reduced lenders reserve requirements in recent weeks as the debt crisis in Europe takes an effect on global expansion. While central banks take steps to support their economies and currencies, developments in Europe will play a key role in determining the outlook globally.