(Reuters) - A top official said the government has options to stem a fall in the rupee but did not offer any specifics, turning the focus on the RBI to stem a rout that sent the rupee to record lows and bond yields surging on Thursday.
The rupee, the worst Asian performer on Thursday in a global market sell-off, was instead supported by the Reserve Bank of India, which stepped in to sell dollars after it slumped to a record low of 59.9350 against the dollar, traders said.
Yet, traders said the RBI's firepower was likely to be limited given it has foreign exchange reserves of $290 billion, only enough to cover imports for seven months.
The mixed government messages and a cautious RBI are exacerbating the perceived vulnerability of a country suffering from a record-high current account deficit in the midst of a global downturn sparked by potential tapering in U.S. monetary stimulus and a weakening Chinese economy.
"Both the willingness and ability appear to be limited for the government," said Samiran Chakrabarty, head of research at Standard Chartered Bank in Mumbai.
"The RBI is also favouring relative free movement of the currency," he added.
The rupee has been among the top decliners in emerging currencies since May due to a current account deficit that hit a record 6.7 percent of gross domestic product in the October-December quarter. It was last trading at 59.82/81 from its 58.71/72 close on Wednesday.
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