Rupee sinks to 68.75 against dollar

Last Updated: Wed, Aug 28, 2013 07:00 hrs

Mumbai, Aug 28 (IANS) The partially-convertible Indian rupee slipped to a new low of 68.75 against the dollar Wednesday.

The slump at the inter-bank foreign exchange market here surpassed the previous low of 66.25 recorded Tuesday.

The rupee was hovering at the 68.20 level around 11.30 a.m. The rupee had closed Tuesday at 66.25 - a depreciation of 2.36 percent from its Monday's close of 64.72 against the dollar.

According to currency analysts, the growing demand for the US currency from importers and a lack of foreign investors' interest in a weak economy is the main reason for the depreciation.

The high month-end demand from oil importers and private orders worth $300-$400 million in the start of the day's trade also escalated the dollar demand.

"There are specific issues which are affecting the rupee; like the bad timing of introducing the National Food Security Bill and escalation in tensions in Syria with a possible US intervention and thereafter, the fallout on the oil prices," Anindya Banerjee, currency expert, Kotak Securities told IANS.

Concerns have been raised over the widening of the fiscal deficit as the lower house of parliament Monday passed the National Food Security Bill, whose implementation will cost nearly Rs.1.3 lakh crore ($20 billion).

Lack of confidence in the Indian economy has also undermined the rupee's value. There are concerns over the soon to be released first quarter gross domestic product (GDP) numbers which are expected to be below expectations.

The free fall in rupee also led to heavy selling in the equities markets. The benchmark index of the Indian equities markets fell by more than 400 points or more than two percent.

The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 17,851.44 points, was trading at 17,696.46 points around 12.00 p.m., down 271.62 points or 1.51 percent from the previous day's close at 17,968.08 points.

The Sensex touched a high of 17,851.44 points and a low of 17,448.71 points during trade so far.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) lost 97.65 points or 1.85 percent down at 5,189.80 points.

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