Rupee at new low
The rupee tumbled to a record low of Rs 53.88 to a dollar '
the third consecutive day that it has been roiled ' as worse-than-expected
inflation numbers and a strengthening dollar across global markets spelt bad
news for the Indian currency.
Dealers and analysts expect that the rupee, which closed at
53.72 on Wednesday, will fall further to Rs 56 to 57 to a dollar as early as
the end of this month as worsening external economic conditions refuse to
abate.
"We see the rupee sliding to 55-56 on account of which
global investors will pull out funds amid fast deteriorating economic
health," said Samir Gilani, head (derivatives) at Mape Securities.
C. Rangarajan, chairman of the Prime Minister's Economic
Advisory Council, said India could do little to check the fall in the rupee as
the slide was driven by external factors especially the appreciation of the
dollar. The rupee has been Asia's worst performing currency this year.
Economists said the RBI's hands-off approach and lack of
intervention in the forex market might be a result of the tight liquidity
conditions in the money market. Other factors impacting the slide include
significant redemption of foreign currency convertible bonds by foreign
institutional investors as well as repatriation of funds by FIIs as the year
draws to a close.
However, credit rating agency Moody's said the falling
rupee would only have a moderate impact on Indian companies. Market men have
expressed worries about the impact of the rupee slide on companies with large
foreign debt. Moody's said rupee depreciation affected the Tata group's
manufacturing companies with large foreign operations, while Tata Steel is the
most "vulnerable" in the group. Indian exporters especially the
technology firms are likely to benefit from the strengthening greenback.
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