India's decision to allow 51 per cent FDI in multi-brand retail has improved the market sentiment and helped the rupee to rebound, Reserve Bank of India Deputy Governor Anand Sinha said on Sunday.
"On the positive side, it (FDI in retail) improved sentiment as was shown in the market. Rupee has rebounded to a considerable extent. There is certainly promise," he said.
Sinha said said the success of FDI in retail depends on how much India gets in the end.
The domestic currency rose to five-month high of 52.49 intra-day on Friday last against the US dollar on signs of strong fund inflows. The rupee has been steadily gaining after the government earlier this month announced reform measures like allowing 51 per cent FDI in multi-brand retail.
Earlier in June, the rupee had plummeted to its lifetime low 57.15 to a dollar.
Besides, Bombay Stock Exchange (BSE) benchmark Sensex is also at 14-month high of 18,762.74 points, aided by consistent FII inflows since the reforms measures were announced by the UPA government.
The government had earlier this month allowed 51 per cent FDI in multi-brand retail, 49 per cent investment by foreign airlines in aviation sector.
The slew of reforms also included raising FDI cap in broadcasting from 49 per cent to 74 per cent and allowing foreign investment in power exchanges, besides a hike in diesel prices.
Sinha is in Beijing to take part in the Regional Policy Forum on Financial Stability and Macro-prudential Supervision, where he spoke on Mitigating Procyclicality in Banking and Bank Regulation.