Rupee plummets to 52.85 vs dollar as industrial output declines
12 Dec 2011
The rupee hit a record low of 52.85 against the US dollar amidst a decline in the country's industrial production, which hit negative territory for the first time in more than two years.
The Indian currency ended down 1.53 per cent at 52.84/85 against the dollar – registering its biggest one-day loss - as foreign investors dumped Indian stocks and bought dollar.
Traders expect the rupee to fall further, hitting levels around 54 a dollar in a few days as FIIs further hammer Indian stocks.
The Bombay Stock Exchange sensitive index fell 2.12 per cent to a two-week low of 15870.35 on Monday, down 343.11 from Friday's close.
Foreign investors have withdrawn a net $147.83 million from India stock markets so far this year after investing $29 billion in 2010, according Securities and Exchange Board of India data.
The Reserve Bank of India (RBI) is in a strange situation where it cannot effectively intervene in the stock market without surrendering at least a major part of its foreign exchange reserves to market forces.
