Rupee breaches 66 level to $
Notwithstanding RBI’s intervention and FM’s repeated assertions about government’s actions, the rupee hit a record low on Tuesday...
- Re closed at 66.24 against dollar
- Re posts biggest fall in about 18 yrs
- Gold shines at record high of Rs 33,700
- RBI sold dollars, but rupee continued sliding
- Food Security Bill is the key reason for the rupee's fall: Analysts
- Market crashes, Nifty 189 pts down
Mumbai (Agencies): Notwithstanding RBI’s intervention and FM’s repeated assertions about government’s actions, the rupee hit a record low on Tuesday and posted its biggest single-day fall in a decade. The partially convertible rupee closed at 66.24/25 per dollar after hitting a record low of 66.30, and down 2.9 per cent from its close of 64.30/31 on Monday.
The crash in the rupee sent the stock markets sharply lower. Sensex closed 590 points or 3.2 per cent lower at 17,968, while the Nifty closed below the 5,300 levels, falling 189 points. And in contrast, gold hit an all-time high of Rs 33,700 per ten grams in the national capital.
Barring IT, all other sectoral indices closed in the red led by Bank, Infra, Realty, Metal, FMCG etc. The 47 of Nifty stocks fell and broader market too was quite weak with advance decline ratio placed at 1:3.5. IDFC, BHEL, Indusind Bank, JP Associates and HDFC remained major losers among Nifty stocks. HDFC, HDFC Bank and ITC together dragged down Nifty by more than 70 points.
While the Finance minister P Chidambaram announced on Tuesday the government’s seriousness to stick to its fiscal deficit target for the fiscal, and declared cabinet approval for power and infrastructure projects and RBI reportedly sold dollars at 65.90 levels, rupee fall did not stop. Though showing a brief recover, it was back to its losing ways.
The rupee has been beaten down 17 per cent so far in 2013 despite frantic attempts by the government and central bank to shore it up. Sources said that the overseas investors sold over $800 million worth of shares in the last seven sessions continued to raise concerns about the raising gap in CAD, mounting pressure on the rupee.
Further, the analysts point out the Food Security Bill is the key reason for the rupee’s fall on Tuesday. Their apprehension would be that, the new bill would increase chances for rating downgrades, if the government fails to contain fiscal deficit. Although, the government hopes to contain the fiscal deficit at 4.8 per cent of GDP in the current fiscal, but it may be tempted to launch few more populist schemes as nearing elections. However, Chidambaram allays fears that the $20-billion Food Security Bill will widen India's alarming fiscal deficit even further. "4.8 per cent of GDP is a red line as far as fiscal deficit is concerned. This red line will not be breached," he said.
Hits new low vs British pound
New Delhi (PTI): The rupee slipped below the 103- level to touch a new bottom of Rs 103.29 against the British pound on Tuesday amid sharp plunge in equities and fresh investor concerns over foreign capital outflows. It finally ended the day at Rs 102.8 against the UK currency, a fall of Rs 2.68 from Monday's close of Rs 100.12 per pound.
The rupee opened weak this morning at around 100 level against the pound and lost further ground to touch a historic low of Rs 103.29 during the intra-day trade in the Interbank Foreign Exchange (Forex) market.