After plunging to a historic level of 49.30 in morning trade, the Indian currency recovered sharply to 48.20 against the US dollar at 1355 hrs after RBI announced a further one per cent cut in cash reserve ratio.
In wild movement at the Interbank Foreign Exchange (forex) market, the domestic currency was trading lower by 20 paise at 1355 hrs after RBI announced a further one per cent cut in cash reserve ratio to 7.50 per cent.
Rupee fell to historic level on mounting fears of heavy capital outflows after global credit crisis spread to Asia, forex dealers said.
Turmoil in bourses and growing fears about a global recession caused worries that there would be heavy capital outflow from equity, they said.
The Reserve Bank of India made a surprise move to hike the Cash Reserve Ratio (CRR) by a hefty 100 basis point, taking a total raise of 150 basis points effective from October 11, releasing Rs 60,000 crore into the banking system.