MUMBAI, Sept 30 (Reuters) - The Indian rupee rose
against the dollar on Friday, ahead of the Reserve Bank of
India's policy review that takes place amid mounting pressure on
the local unit.
The rupee was quoting at 81.56 by 0404 GMT, up from
81.86 in the previous session.
The RBIat 1000 Indian Standard Time (0430 GMT)is expected
to raise rates by 50 basis points as it seeks to bring down
inflation and looks to protect the rupee that in recent sessions
has repeatedly notched record lows.
"Any out of the box measures to stem the rupee depreciation
would be in focus," IFA Global Research Academy said in a note.
The RBI is said to be contemplating measures such as opening
a special window for oil importers and reducing hedging costs
for foreign-currency depositors to slow the pace of decline, the
Economic Times reported earlier this week, citing people
familiar with the matter.
The rupee received a boost from data out late Thursday that
showed that India's current account deficit widened less than
expected in the April-June quarter.
India's CAD for the period was $23.9 billion, wider than the
$13.4 billion in the preceding quarter but lesser than the $30.5
billion economists were expecting.
In terms of percentage of the GDP, the CAD widened to 2.8%,
the highest in four years. A Reuters poll of 18 economists were
expecting CAD of 3.6% of the GDP.
"CAD came in better than expected due to the upside surprise
in services," Kotak Securities' Suvodeep Rakshit said.
Meanwhile, FTSE Russel said India will be retained on its
watch list for a potential upgrade to Market Accessibility Level
'1' and for consideration for inclusion in the FTSE Emerging
Markets Government Bond Index (EMGBI).
"The FTSE announcement is a non-event for the rupee. The
J.P. Morgan decision is the one that matters," a trader at a
private sector bank said.
(Reporting by Nimesh Vora; Editing by Savio D'Souza)