Rupee slides; hits new 32-month low of 51.9151 against dollar

The Indian rupee hit a fresh 32-month low of 51.9151 a dollar in early afternoon trade on the interbank foreign exchange market in Mumbai today, as heavy dollar demand continued to hammer the domestic unit for the sixth consecutive day.

This is the lowest level the Indian currency reached against the dollar since the record low of 52.18 a dollar reached on 3 March 2009.

The rupee opened trading at 51.3850 to a dollar, against the previous close of 51.3350 a dollar and was trading at 51.8750 to the dollar in afternoon trade.

The recent hike in investment limit for foreign institutional investors an corporate bonds and government securities did not help reverse the declining trend in the rupee as global investors continued to shun emerging market equities and currencies.

The rupee has plunged 14.4 per cent, from Rs43.95 on 27 July to Rs51.35 in less than four months – its steepest fall since the last global economic crisis, when it fell as much as 19.5 per cent, from Rs41.89 on 7 August 2008 to a record low of Rs52.06 on 5 March 2009.

The recovery this time, however, may not be all that easy considering the country's current account deficit (CAD), ie, the gap between what the country earns from exports, remittances and other current forex income sources, and what it pays out.