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Indian rupee falls to seven-week low amid increasing dollar demand

07 Mar 2012 Evaluate

Indian rupee continued to fall for the fifth consecutive session on Wednesday, sliding to a seven-week low, because of increasing dollar demand from oil refiners and gold importers. Thinning capital inflows due to mounting worries over slowing world economies and renewed uncertainty over Greece's added to the downward pressure on the local currency. Poor performance by the local shares also shaded the rupee move. However, rupee is reacting to the immediate impact of the Congress rout in UP and Punjab elections. The defeat has stoked fears that the central government may be unable to push through any strong reform measures, which are considered essential to boost the sagging economy’s prospects. Lower growth gives less reason to invest in the economy for foreigners, leading to lower demand for rupees.

The partially convertible currency is currently trading at 50.59, weaker by 22 paise from its previous close of 50.37on Tuesday. It has touched a high and a low of 50.75 and 50.40 respectively. The Reserve Bank of India's (RBI) reference rate for the dollar stood at Rs 50.0265 and for Euro it stood at Rs 66.0203 on March 6, 2012. While, the RBI's reference rate for the Yen stood at 61.39 the reference rate for the Great Britain Pound (GBP) stood at 79.3170. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

Date1US$1GBP

March 6, 2012

50.0379.3170
March 5, 201249.8078.7919
(RBI-Reference Rate)  

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