Rupee falls to 63 per dollar

The rupee hit a record high Monday as the defense of the currency of India has failed to stop the decline, but exacted a toll on the rise, bond yields soaring highs and investors five years demanding higher yields in an auction of treasury bills auction.

The rupee fell to 63.00 to the dollar, down about 2 percent on the day surpassing the previous record of 62.03 successfully on Friday, despite a series of measures in recent weeks by the central bank and the government to defend it.

falling of rupees

Measures policymakers to support the currency, which has fallen 12 percent against the dollar so far in 2013, have so far proved ineffective, making it the worst performer in emerging Asia and threatening to drive the third largest economy of the region into a full blown crisis.

In another threat to the economy, already slowing, the efforts of the RBI to strengthen the currency by draining liquidity in financial markets is pushing up the market interest rate.

Axis Bank (AXBK.NS) on Monday became the latest lender to increase its minimum rate of 25 basis points to 10.25 percent, pushing up the cost of home and auto loans.

why rupee fall

"Our main concern is that the political authorities do not always 'get' it - thinking that it is a relatively minor grain calm down fairly quickly with relatively minor measures," Robert Prior-Wandesforde, an economist at Credit Suisse wrote in a note Monday.

"If this is the case, then a quick 65 movement against the U.S. dollar is likely, which should help the spirits of discussion."

While the current crisis in India mentioned parallel to 1991, when he was the gold of allegiance to the International Monetary Fund chief economist of the World Bank on Monday said such comparisons were unjustified and India n ' not to ask for a credit line from the IMF.

"Many people came to me (ask) if we are in since 1991 It is completely a non-issue because if you look at a couple of numbers there is absolutely no comparison," Kaushik Basu, a former senior government official now at the World Bank, said in New Delhi.


A record current account deficit of 4.8 percent of gross domestic product (GDP) in the last fiscal year has made India vulnerable as funds leave emerging markets in the expectation that the Fed will soon reduce its quantitative easing.

Net Indian bonds and stocks total $ 11.4 billion since the end of May outputs. Yet, India has reserves to cover seven months of imports, against only three weeks in 1991.

rupee falling why

The bond market in India has been on the outs, foreigners who take around 10 billion since May 22

Equity markets remained relatively isolated with outputs on the spot market at least $ 100 million on Friday, when the main stock benchmark fell by about 4 percent, the most in nearly two years. Increased equity sale could exacerbate the fall of the rupee, dealers said.