The Indian rupee has gained ahead of an announcement in which the government is expected to unveil measures to stop it falling against the US dollar.
The Indian currency rose to 56.45 rupees to the US dollar in early trade on Monday. It had fallen to a record low of 57.32 rupees to the US dollar on Friday.
Analysts said India may relax limits on foreign investment and raise interest rates on deposits by non-resident Indians to boost the currency.
The Indian rupee has been one of the worst performing currencies in the region. It has fallen almost 25% against the US dollar in the past year. Too late?
The drop in the currency has coincided with a slowdown in India's economic growth.
India's economy expanded at an annual rate of 5.3% in the first quarter, the slowest pace of growth for nine years. The slowdown has resulted in calls for the Reserve Bank of India to cut interest rates.
However, the weakness of the rupee has made things complicated for the central bank. A weak currency has contributed to rising consumer prices in the country.
The high rate of inflation was the key reason cited by the central bank when it left its interest rates unchanged earlier this month. Analysts said that the government had been late in taking action.
"They have left it too late. When things started to change for the Indian economy months ago, they should have communicated a policy path to the markets," Tony Nash, managing director of IHS Global told the BBC.
"Right now it looks too reactive and quick reactive policy changes scare investors." Broader issuesIndia's economy has been going through a rough patch in recent times.
Many analysts have said that it needs to introduce a fresh wave of economic reforms to sustain long-term growth. Last week ratings agency Fitch cut its outlook for the Indian economy to negative, saying there were "heightened risks" to its growth.
It said that India's growth potential: "will gradually deteriorate if further structural reforms are not hastened". Another ratings agency, Standard & Poor's, has also warned that India may lose its investment-grade status.
Analysts said that India's policymakers needed to take care of these issues to boost confidence among investors and improve the country's investment climate, rather than relying on short-term measures to support the rupee.
bbc.co.uk
The Indian currency rose to 56.45 rupees to the US dollar in early trade on Monday. It had fallen to a record low of 57.32 rupees to the US dollar on Friday.
Analysts said India may relax limits on foreign investment and raise interest rates on deposits by non-resident Indians to boost the currency.
The Indian rupee has been one of the worst performing currencies in the region. It has fallen almost 25% against the US dollar in the past year. Too late?
The drop in the currency has coincided with a slowdown in India's economic growth.
India's economy expanded at an annual rate of 5.3% in the first quarter, the slowest pace of growth for nine years. The slowdown has resulted in calls for the Reserve Bank of India to cut interest rates.
However, the weakness of the rupee has made things complicated for the central bank. A weak currency has contributed to rising consumer prices in the country.
The high rate of inflation was the key reason cited by the central bank when it left its interest rates unchanged earlier this month. Analysts said that the government had been late in taking action.
"They have left it too late. When things started to change for the Indian economy months ago, they should have communicated a policy path to the markets," Tony Nash, managing director of IHS Global told the BBC.
"Right now it looks too reactive and quick reactive policy changes scare investors." Broader issuesIndia's economy has been going through a rough patch in recent times.
Many analysts have said that it needs to introduce a fresh wave of economic reforms to sustain long-term growth. Last week ratings agency Fitch cut its outlook for the Indian economy to negative, saying there were "heightened risks" to its growth.
It said that India's growth potential: "will gradually deteriorate if further structural reforms are not hastened". Another ratings agency, Standard & Poor's, has also warned that India may lose its investment-grade status.
Analysts said that India's policymakers needed to take care of these issues to boost confidence among investors and improve the country's investment climate, rather than relying on short-term measures to support the rupee.
bbc.co.uk
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