RTTN: Indian Rupee Plunges To 15-day Low Against Dollar
(RTTNews) - Thursday, the Indian rupee fell to a 15-day low against the dollar as a slump in local stocks increased prospects of more capital outflows.
India's BSE Sensex closed 1.16 percent lower today, tracking the fall in global markets, with banks such as State Bank of India and ICICI Bank leading the losses.
The 30-share BSE index ended down 197.03 points at 16,812.14 with 23 components losing.
The 50-share NSE index closed down 1.34 percent at 4,995.80 points.
The dollar's strength overseas was also hurting sentiment on the rupee. The dollar soared as a slide in global share prices cooled risk demand and put the brakes on a rally in higher-risk currencies.
The dollar was also supported by Chinese GDP figures. While showing economic growth quickened, the data sparked selling in higher-yielding currencies, including the Australian dollar, as some in the market had expected even stronger expansion.
India's inflation rate remained positive for the sixth straight week, and rose to 1.21% for the week ended October 10. In the preceding week, it was 0.92%.
The annual rate of inflation was 11.30% for the corresponding week of the preceding year, say data released today by the Ministryof Commerce and Industry.
The build-up inflation during this fiscal year so far increased to 5.95% from 5.56% in the corresponding period last year. The 52-week average inflation for the week ended October 10 was 2.49%, the data showed.
With the economic recovery yet to grow deep roots, the Finance Ministry hoped that the Reserve Bank of India or RBI would maintain the status-quo in its monetary policy review next week and not signal any hike in interest rates. Ahead of the monetary and credit policy review, RBI Governor Duvvuri Subba Rao is expected to meet Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee on October 23.
Economic analysts feel that the RBI will stick to a wait-and-watch policy, and maintain a status quo on its policy stance, as inflationary pressures are building up in the economy in the wake of rising food prices.
At 6:05 am ET, the Indian rupee plummeted to a 15-day low of 46.8250 against the dollar. If the Indian currency weakens further, it may target the 47 level. At yesterday's close, the dollar-rupee pair was quoted at 46.47.
The Indian currency has been steadily declining against the dollar after it reached a 13-month high of 45.7650 on October 15. Since then, the rupee has lost more than 2%.
