Rupee nears 50-a-dollar mark as foreign investors dump Indian equities
22 Sep 2011
The rupee plummeted to 49.5425 against the US dollar, its lowest in more than 28 months, as the Indian currency shed nearly 2.4 per cent in one day amidst a sell-off in the stock markets by investors seeking safer bets like debt and precious metals.
This is the biggest one-day loss registered by the rupee against the greenback in more than 15 years.
The partially convertible Indian currency fell to as low as 49.5750 against the dollar in intra-day trading as investors offloaded Indian equities in favor of the dollar's relative safety amidst concerns that the global economy is weakening.
A similar sell-off in global equities also hammered major Asian currencies, helping the US currency firm up further. The dollar climbed to a seven-month high against major currencies as well.
The decline in rupee value will fuel India's inflationary woes, making imported goods such as crude oil, which has a major share in India's imports, costly.
The dollar hit a seven-month high after the Federal Reserve said there were "significant downside risks" to the economy, indicating that the US central bank may still loosen its monetary policy. This led to a sell-off in high-yielding currencies.
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