The Indian rupee breached the 65 mark against the dollar on Thursday surpassing the previous all-time low of 64.55 hit just yesterday. The partially convertible rupee fell 1.4 per cent against Wednesday's close of 64.11.
Markets tracked the rupee, falling for the 5th consecutive day. The BSE Sensex traded down 140 points or 0.7 per cent in opening trades, while the broader Nifty slipped below the key 5,300 levels, dropping over 45 points.
The rupee weakened tracking the strength in the dollar index, which measures the greenback versus a basket of six currencies. The dollar index rose to 81.422, from a low of 80.896.
Fresh weakness in the rupee comes after minutes from the Federal Reserve's July policy meeting showed the U.S. central bank was on track to start tapering stimulus as early as next month.
Top officials of the Fed were mostly in agreement that the central bank should end its massive bond-buying program, which has been in place in one form or another since late 2008 to keep interest rates low and encourage economic growth.
A Deutsche Bank report on Wednesday had predicted the rupee's slide all the way to 70 in a month or so.
The Reserve Bank of India has proven unable to stem the rupee's selloff, despite intervention and curbs on outflows from companies and individuals, which have dented India's stock and bond markets. The government continues with incremental steps, banning duty-free import of flat-screen televisions.
The RBI's announcement on Tuesday to reverse its tightening strategy and start buying bonds has further confused traders.
"In our view, the problem is that the RBI is trying to juggle too many balls, which sends confusing signals and damages its credibility," Nomura said in a report on Wednesday.
However, Arvind Narayanan of DBS bank told NDTV that it is unfair to blame the Reserve Bank.
"There is no magic wand here. The rupee is behaving in-line with broad fundamentals of the region. The only thing we can do is to attract long term capital inflows," he said
Source:- profit.ndtv.com
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