Rupee hits new low at 58.98 against dollar

Mumbai/New Delhi, June 11 (IANS) The Indian rupee fell for the second straight day Tuesday, slumping to 58.98 against a dollar on continuing worries over current account deficit and increased demand for the US currency from importers.

The partially convertible rupee weakened by 80 paise to hit a new low of 58.95 against a dollar at the inter-bank foreign exchange market, Mumbai.

It recovered during in the late afternoon session and closed at 58.40 against a dollar, down 0.4 percent from its previous day close at 58.16, on suspected interventions from the Reserve Bank of India.

Comments from senior government officials regarding possible intervention helped the recovery in the currency markets.

Chief economic advisor in the finance ministry Raghuram Rajan said the market regulator Securities and Exchange Board of India (SEBI) and the Reserve Bank of India would take “warranted” action to control the rupee slide.

“SEBI, RBI and the government are keenly following what is happening and everybody will act when the time comes,” Rajan said while addressing a press conference in New Delhi.

Rajan said the factors that were responsible for rupee slide were reversing and the currency would stabilise in a few days.

The Indian currency registered its biggest fall in almost two years Monday. It slumped by 1.9 percent to close at 58.16 against a dollar.

The value of rupee has depreciated by more than eight percent in the past one and a half months. It has dropped in 16 out of the last 18 trading sessions.

The rupee is under pressure due to worries over widening current account deficit and firming of the dollar against major global currencies, including the Euro and the Japanese Yen.

Economic Affairs Secretary Arvind Mayaram also said the rupee would stabilise in three-four days.

“In next three-four days, we will see a mid-course correction…Rupee is going to stabilise and we are going to see a positive movement,” Mayaram told reporters.

Mayaram said the government was not “unduly disturbed” by the recent fall in the value of Indian currency.

“This is a temporary phase. This is simply a correction. Our indication is some of the FIIs (foreign institutional investors) are now poised to bring in large funds,” Mayaram said.

“Certainly we are not happy about it, but we are certainly not unduly worried about it. There will be a course correction,” he added.

The sliding rupee put pressure on the markets. The benchmark Sensex of the Bombay Stock Exchange (BSE) slumped 1.53 percent to 19,143.90 points, while the Nifty of the National Stock Exchange fell 1.52 percent to 5,788.80 points.

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