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India rupee hits all-time US dollar low | India rupee hits all-time US dollar low |
(about 4 hours later) | |
India's rupee has hit an all-time low against the US dollar, with companies buying the greenback amid continuing fear about the global financial crisis. | India's rupee has hit an all-time low against the US dollar, with companies buying the greenback amid continuing fear about the global financial crisis. |
The rupee plunged to 52.50 to the dollar on Tuesday, sparking new inflation concerns. The rupee has now fallen 14% since the start of 2011. | The rupee plunged to 52.50 to the dollar on Tuesday, sparking new inflation concerns. The rupee has now fallen 14% since the start of 2011. |
Delhi said the fall reflected market uncertainty and urged against an "overreaction". | Delhi said the fall reflected market uncertainty and urged against an "overreaction". |
The fall is also due to some investors leaving emerging markets, analysts say. | The fall is also due to some investors leaving emerging markets, analysts say. |
"At this moment, the dynamics seem to be pretty much against all emerging market currencies and that's not really helping the rupee," economist Siddartha Sanyal told AFP news agency. | "At this moment, the dynamics seem to be pretty much against all emerging market currencies and that's not really helping the rupee," economist Siddartha Sanyal told AFP news agency. |
The previous rupee low was in March 2009. | |
Shares rise | Shares rise |
India's finance ministry has said that the central bank - the Reserve Bank of India - had only a "limited" ability to curb the fall of the rupee. | India's finance ministry has said that the central bank - the Reserve Bank of India - had only a "limited" ability to curb the fall of the rupee. |
Trade secretary Rahul Khullar urged investors not to "overreact" to the weakening rupee. | Trade secretary Rahul Khullar urged investors not to "overreact" to the weakening rupee. |
Finance Minister Pranab Mukherjee said the fall reflected uncertainty in the international markets. | Finance Minister Pranab Mukherjee said the fall reflected uncertainty in the international markets. |
"We expect there will be a self correction," he said. | "We expect there will be a self correction," he said. |
Foreign investment in Indian equities has slumped this year, with India's market regulator putting the figure for 2011 so far at a net $530m, compared with $28.9bn during the same period last year. | |
Interest rates have been increased regularly over the past 18 months to try to curb overheating, but price rises remain a concern. | Interest rates have been increased regularly over the past 18 months to try to curb overheating, but price rises remain a concern. |
A weaker rupee makes imports more expensive and India is a massive oil importer. | |
On Tuesday, the Sensex index of leading shares was up slightly, after falling 2.6% on Monday. There had been eight straight sessions of decline. | On Tuesday, the Sensex index of leading shares was up slightly, after falling 2.6% on Monday. There had been eight straight sessions of decline. |
Kishor Ostwal, chairman at CNI Research, told Reuters: "So long as the rupee is falling, I don't think anything can change fundamentally. What we are seeing today is purely because of short covering." | Kishor Ostwal, chairman at CNI Research, told Reuters: "So long as the rupee is falling, I don't think anything can change fundamentally. What we are seeing today is purely because of short covering." |
The rupee remains the worst performing of Asia's 10 most-traded currencies. | The rupee remains the worst performing of Asia's 10 most-traded currencies. |
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