Tuesday, December 13, 2011

Indian Rupee declined to record low

Rupee sank to a record low of 53.21 per dollar today tracking weak equity market and on worries Europe's debt crisis could exacerbate the growth slowdown in Asia's third-largest economy. Rising import bill, concern over outflows from equity market also weighed on local currency.  India's industrial output fell 5.1% in October, far more than the median forecast for a 0.5%.   It was the first monthly drop in more than two years.
The Reserve Bank of India has said that it will intervene only to smoothen volatility, and not to target specific levels. Increasing dollar demand from oil importers also push down the rupee.  India imports more than three-quarters of its oil requirements and local refiners are the biggest buyers of dollars in the domestic currency market.
Asian stocks declined and the euro languished near a two-month low as investors took fright at the prospect of mass euro zone sovereign ratings downgrades after the outcome of a "last chance" European Union summit failed to convince markets.

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