Indian rupee sags to record low despite government steps

Mon Aug 19, 2013 1:48am EDT
 
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By Subhadip Sircar

MUMBAI (Reuters) - The Indian rupee fell to a record low on Monday and looked poised for further losses, with a series of measures unveiled last week failing to stall its decline.

The currency fell as far as 62.46 to the dollar in early trade, breaching the previous low of 62.03 hit on Friday.

Some dealers are expecting further dollar selling by the central bank as well as other measures to prop up a currency that is down 10.8 percent in 2013, making it the worst performer in emerging Asia.

Traders seemed unconvinced about the efficacy of steps unveiled last week to contain the current account deficit at 3.7 percent of gross domestic product (GDP) during the current fiscal year, sharply lower than the record high 4.8 percent in the previous year.

"Forex intervention will continue by the central bank. Further measures are expected from the RBI but are unlikely to be effective. The rupee is expected to touch 63 in no time," said Param Sarma, chief executive at Brokerage NSP Forex.

The partially convertible rupee closed trading at 61.65/66 last week.

Finance Secretary Arvind Mayaram told the Economic Times that the government was not looking for now at taking further steps to tackle the rupee's fall, but wanted to watch the impact of its recent measures. (link.reuters.com/fub52v)

The rupee's tumble has fuelled expectations of more action from the Reserve Bank of India (RBI), which last week curbed outflows from companies and individuals, roiling stock and bond markets on Friday. Policymakers later stepped in to assuage nerves that the government was not looking at curbing foreign money outflows.   Continued...

 
A cashier counts Indian rupee currency notes inside a bank in Mumbai August 5, 2013. REUTERS/Danish Siddiqui