Following the announcement by the government that overseas retailers can invest in the Asia’s third-largest economy India, the rupee went up to a four-month high, a report has unveiled recently.

Prime Minister Manmohan Singh said last Friday that minority stakes can now be owned by foreign airlines in local carriers. The declaration was to be seen after it was decided that fuel subsidies should be cut and the budget deficit should be squeezed.

However, as per the findings, a hold on the key repo rate by the Reserve Bank of India disappointed investors. It has been found that the RBI has inspite decided to inject more liquidity and lower the cash reserve ratio of banks by
25 basis points.

It is being said that the currency scaled down its gains following the repurchase rate remaining unchanged at 8%. The same was up by 0.9% to 53.8050 per dollar with a 2% further advance last Friday. Also, it reached up to
53.6550, the greatest level since May 15, on Monday.

"The market has been starved of good domestic news out of India for a long time, hence the positive sentiment in recent session can run further in our view", said currency strategist Jonathan Cavenagh of Westpac Banking Corp.