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India to allow more freedom to market participants as rupee stabilises

An employee arranges rupee notes at a cash counter inside a bank in Agartala, June 3, 2010. REUTERS/Jayanta Dey/Files

MUMBAI (Reuters) - The RBI said on Friday it would allow more freedom to market participants engaged in foreign exchange trading as the rupee stabilises.

Reuters had earlier reported that the Reserve Bank of India (RBI) had relaxed intraday foreign exchange trading position restrictions that it imposed on some banks back in June.

Governor Raghuram Rajan, speaking to reporters after the RBI's mid-quarter policy review, said he does not anticipate a new set of rupee stabilising measures since the U.S. Fed had decided to postpone tapering its bond buying program.

Rajan said capital flows into the country cannot be directly linked to the prevailing repo rate.

Rajan surprised markets in his maiden policy review earlier on Friday by raising interest rates to ward off rising inflation while scaling back some emergency measures put in place to support the rupee, which hit record lows in late August.

(Reporting by Neha Dasgupta and Mumbai Treasury Desk; Editing by Kim Coghill)