Rupee hits a new low of 53.44 vs dollar as FIIs pull back funds

The rupee closed at a fresh low of 53.44 to the dollar on Thursday, down 46 paise or 0.89 per cent from yesterday's closing of 52.96/97 against the US currency, hammered by rising dollar demand and increased outflows of capital.

The dollar, which was trading at around 53.22 a dollar levels in the morning, touched an intraday high of 53.4550, before being pulled back to 53.44 levels.

Today's decline comes on top of yesterday's 23 paise fall that pulled down the domestic unit to a near four-month low of 52.96/97 against the greenback.

The Reserve Bank of India (RBI) is reported to have intervened briefly to support the rupee with dollar sales for a second consecutive day today. But that could hardly defend the rupee against the rampant withdrawal of foreign funds and rising import bill.

With a relatively low foreign exchange reserves vis-à-vis the country's widening current account deficit and increasing outflows of foreign funds. RBI could do little to stem the rupee's fall.

Any further intervention by the RBI would only worsen an already acute liquidity shortage leading to a spike in the repo rate as banks increase borrowings from the RBI. The central bank may now look at administrative measures to check the rupee's fall and conserve precious foreign exchange.