Rupee hits 53.40 a dollar as stock markets turn choppy
13 Dec 2011
The rupee continued its free fall, hitting a historic low of 53.40 against the US dollar in early morning trade on the inter-bank foreign exchange market today.
The rupee opened trading at 53.10 against the dollar, down 26 paise from yesterday's close of 52.84 a dollar, and touched 53.40 against the US currency, down 56 paise from the previous day's close, before quoting at 53.32 a dollar at 10:30 am.
The rupee was hammered by rising demand for dollar from banks and importers on the back of a firm dollar in overseas markets and a choppy equity market at home.
The dollar also gained strength from the crisis in the euro zone. It gained against most major currencies in the New York market yesterday, while the euro fell to its lowest level in two weeks amid renewed concerns that European leaders aren't doing enough to contain the region's sovereign debt crisis.
The Reserve Bank of India seems to have made a feeble attempt to stem the fall of the rupee through dollar sales through state-run banks. But that did not help avert further depreciation of the rupee.
The central bank and the government are in an unenviable situation where both authorities can only wait, leaving the rest to market forces.
The Indian economy is now in a vulnerable position with continued outflows from the stock market after official data released on Monday showed a 5.1-per cent fall in October industrial production.
The government also cut GDP growth projections amidst falling demand, a still-high inflation and serious balance of trade problem.
