The Indian rupee weakened on Monday after a finance ministry official said the government did not plan to raise limits on firms' overseas borrowing, which led traders to cover short dollar positions. The partially convertible rupee ended at 42.155/165 per dollar, off a low of 42.21 but still 0.2 percent weaker than 42.065/075 at Friday's close.
The official added that interest rate spreads for external commercial borrowing (ECB) could be revised after pressure from firms looking to raise funds more cheaply overseas. Allowing firms to repatriate a greater proportion of the funds raised abroad would support the rupee.
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