Hikes on foreign currency deposit rates to support rupee
By Vaibhav Aggarwal
Sep 19, 2008
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The Indian rupee rose sharply on Wednesday after posting its biggest single-day fall in a decade on Tuesday, supported by the central bank's move to make rates on deposits by non-residents more attractive.

India's second largest public sector bank, Punjab National Bank (PNB) has raised the interest rates by 50 basis points for non-resident deposits in foreign currencies including US dollar, Euro and British Pound. The interest rates on rupee deposits by non-residents have also been increased by 50 basis points by the bank. The hikes in deposit rates are effective from September 17.

The central bank has increased the interest rate on some foreign-currency deposits by 0.50% to attract inflows of dollar and other foreign currencies. The bank aims to strengthen the rupee through this move. Traders said commitment by the Reserve Bank of India (RBI) to continue intervening to support the rupee has helped the rupee to gain strength.

K.C. Chakrabarty, Chairman of PNB says that the bank expects the RBI to intervene to add liquidity to the banking system in view of the current global market crisis.

"The immediate tendency is to infuse liquidity in the market. After sometime, they (central bank) may tighten but immediately I don't see any such action," Chakrabarty said when asked if central bank may raise interest rates further.

Earlier PNB saw a reduction in interest rates on its various non resident schemes.

PNB has centers all over the country through which its offers a wide range of banking services including corporate and personal banking, industrial finance, agriculture finance, financing of trade and international banking. It offers world class banking facilities like anytime, anywhere access to account, complete details of transactions and statement of account, online information of deposits, loans, overdraft account etc.


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