Rupee freefall continues; crosses Rs54 per dollar mark
15 Dec 2011
The Indian rupee fell by another 48 paise to yet another record low of Rs 54.30 per US dollar in early trade on Thursday, breaching the Rs54 per dollar mark for the first time in history on the fourth day of its free-fall.
The fall was largely due to sustained foreign capital outflows as investors grew increasingly bearish about the outlook for both the domestic and global economies, along with dollar gains against the euro and other rivals overseas.
The rupee had tumbled by 48 paise to close at an earlier record low of Rs53.71/72 per dollar in the previous session on strong demand for the American currency (See: Rupee's plunge hits new record low of 53.75 against dollar). Today's further fall takes its losses to nearly 20 per cent since July, with the pace of decline gathering momentum in recent
days.
Offshore non-deliverable forwards were indicating further weakness, with the one-month rupee NDFs at around 54.80.
The Reserve Bank of India, which has been largely absent from the foreign exchange market in recent days, was sporadically selling dollars, but most observers felt it was unlikely to intervene aggressively.
The RBI's hands-off approach has amplified the currency's weakness as exporters have hesitated to book dollar receivables, while importers have been forced to cover short dollar positions.
The central bank's upcoming policy review on Friday could offer some succour to the panicky foreign exchange market.
