These cash shortages increase banks' funding costs, making it harder for them to lower lending rates

In 2013, India suffered its worst currency crisis in more than two decades but has regained the confidence of foreign investors in part after its current account deficit has narrowed sharply and its foreign exchange reserves hit a record high

The surge is a stark turnaround from 2013 when the country's current account gap hit a record high due to outflows on expectations the US Fed would rein in its stimulus programme

Forex market was closed on Thursday on account of Ganesh Chaturthi.

Balance of payment stood at a surplus of $30.1 billion during January-March

India needed more specialists within government

The Reserve Bank of India sold dollars via state-owned banks around 62.3575 per dollar to contain the rupee's fall, traders said.

In the offshore non-deliverable forwards, the one-month contract was at 62.26/36, while the three-month was at 62.83/93.

Foreign investors have bought around $2.4 billion in both debt and equity so far in October, pushing the total inflows to nearly $36 billion so far in the year.

The partially convertible rupee closed at 61.45/46 per dollar, weaker from Wednesday's 61.35/36.

In the offshore non-deliverable forwards, the one-month contract was at 61.56/66, while the three-month contract was at 62.16/26.

The rupee appreciated by three paise to close at one-week high of 60.81 against the US dollar in the previous session on sustained dollar selling by exporters and capital inflows.

Rajan also said the RBI had reduced the current account deficit "substantially".

India's macroeconomic indicators are improving and inflation has been coming down consistent with the central bank's forecast, but Asia's third-largest economy needs investment growth to pick up, he added.

The rupee bounced back by 26 paise to end at 59.93 against the American currency on Friday as exporters and some banks sold dollars.

The rupee had revisited the near 2-month low of 60.55 per dollar earlier in the session.

The rupee had closed at 60.1550/1650 per dollar on Monday.

Increased selling of the dollar by banks and exporters amid sustained foreign capital inflows supported the rupee.

The bank adds it expects Modi to fight inflation through administrative measure

A higher opening in the domestic equity market also supported the rupee but dollar's gain against other currencies overseas limited the rise of domestic unit, forex dealers said.