Rupee hits a 20-month low of 64.25 a dollar as FIIs take down markets in tax fight
07 May 2015
The Indian rupee slumped to a new low of 64.25 against the US dollar, its lowest since September 2013, as foreign institutional investors extended equity sales in a sustained withdrawal of funds from the country.
Continued FII outflows and sustained dollar demand from importers and banks kept pressure on the rupee,, forex dealers said.
A sudden spurt in crude oil prices also weighed on the rupee, although this was capped by dollar's weakness overseas, they pointed out.
The BSE Sensex fell for the third straight session on Thursday, closing at its lowest level in nearly six-and-a-half months on continued selling by foreign investors annoyed by government's stand against any retrospective withdrawal of the minimum alternative tax on stock market earnings.
The Sensex closed down 0.44 per cent at 26,599.11, while the NSE Nifty fell 0.49 per cent to 8,057.30.
The Sensex closed at its lowest level since 21 October 2014, while the NSE index finished at its lowest level since 17 December 2014.
The rupee opened trading at the inter-bank forex market lower at 63.75 a dollar against the previous closing level of 63.54 a dollar. It slid further to breach the 64-level to trade at 64.25 at mid-session, showing a significant fall of 71 paise overnight.
The rupee was hammered by continued outflows of foreign funds agitated over the government's taxation policies that threaten to reduce the allure of local assets for foreign institutions.
Traders said the uptick in non-deliverable forwards traded in Singapore was hitting the sentiment and prompting custodian banks to sell the rupee.
Other emerging Asian currencies also lost ground on Thursday as a fall in global bond prices lifted local government bond yields across the region.
Traders now expect central bank to steps in to prevent a further sharp fall in the currency, which would further impair potential of curreny defences of individual countries.