Rupee falls to new low of 56.91 against dollar

Rupee falls to new low of 56.91 against dollar

The Indian rupee steadily weakened to a new lifetime-low against dollar on Friday, after risk assets were hit by heightened concerns about the world economy. It had opened at 56.80 to the dollar, weaker than Thursday’s close.

At 9:45, the rupee was at 56.87 to the dollar, down by one per cent or 57 paise, after hitting a new all-time low of 55.91.

The Indian currency had ended at a record closing low 56.30 against the US dollar on Thursday after hitting the then all-time low of 56.55 to the dollar on increased capital outflows from equity markets and rising demand from importers amid the US Fed indicating weak growth prospects for the US economy.

No significant intervention was seen from the Reserve Bank. Forex traders said that they were on watch for any potential intervention from the RBI to defend the rupee, as the renewed global risk aversion amid deep uncertainty about India's fiscal and economic outlook.

Asian shares fell on Friday and the safe-haven dollar hovered near its highest in a week-and-a-half after weak manufacturing data from the United States, Europe and China heightened fears over the outlook for global growth. The Dow fell over 250 points too on Thursday.

A long-expected downgrade to the credit ratings of 15 of the world's biggest banks by ratings agency Moody's added to the gloom, which also weighed on commodities and currencies such as the Australian dollar that are linked to resource demand.

Federal Reserve’s move to extend its current bond-buying programme by less than expected levels had earlier fuelled a weakness in global markets on Thursday along with weak factory data from China and a contraction in the euro zone's private sector contributed to the falls.

The rupee has been plagued by concerns about Indian economy too as credit rating agencies Fitch and S&P warned about a paralysis in policy making affecting the country.

The rupee will remain vulnerable to any flare-ups of global risk aversion, while also subject to domestic challenges, experts said. It has now fallen over 25 per cent in the last one year and nearly 6 per cent in 2012.

Source : profit.ndtv.com