India central bank intervened to stem rupee fall

India's central bank intervened to curb the slide of the rupee after it skidded to new lifetime lows, a government official confirmed, but added monetary authorities were not defending "any particular rate". The intervention on Tuesday by the Reserve Bank of India (RBI) lifted the rupee off its record low struck earlier in the day of 58.98. The Indian currency strengthened further Wednesday to 58.12 rupees to the dollar. "We're not defending any particular rate," Montek Singh Ahluwalia, deputy head of India's Planning Commission, told India's CNBC-TV18 financial news channel on Wednesday. "But at the same time the RBI intervenes when it thinks things are being pushed a little too far," he added. "They did intervene yesterday which would suggest they felt market pressures were pushing the currency to an unneccessary low point and that did lead to some reaction," he said. "I don't think that one can say anything more than that when you're dealing with an exchange rate that's market determined," Ahluwalia said. The RBI was suspected to have "intervened at around the 58.97 level by selling dollars", a private bank dealer, asking not to be named, told AFP. The rupee has been hit by speculation that the US Federal Reserve will cut back on asset purchases which have fuelled flows into emerging markets and as well as by growing concern about India's economic weakness. Emerging market currencies across the world have been hit by dollar strength triggered by an encouraging US jobs report. "The panic has subsided for the near-term," said Abhishek Goenka, chief executive with India Forex, a consultancy firm said. Goenka called Wednesday's rupee pullback a mix of a "technical correction" and "improved sentiment". "The market certainly required some type of confidence building measure," Goenka said, referring to the central bank intervention. But he cautioned that the rupee's stronger tone was likely to be short-lived. The finance ministry's chief economic adviser Raghuram Rajan told reporters in New Delhi on Tuesday that Indian authorities "will take action as warranted" to curb the rupee's fall. The RBI has a policy of not commenting on movements in the foreign exchange market and of intervening only to curb volatility. Analysts say the bank cannot intervene heavily to buttress the currency as it must retain enough foreign reserves for imports. It only has sufficient reserves for seven months of imports -- the lowest cover in 13 years. Rajan said he believed the rupee was "oversold" and that the rupee had fallen below "what is warranted by (economic) fundamentals".