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Rupee extending the fall nears all time low level

21 Nov 2011 Evaluate

Indian rupee dropped past 52 a dollar, the lowest level since March 2009, after the government signaled the central bank may not sell dollars “aggressively” to stem the local currency’s depreciation. R. Gopalan, secretary of economic affairs in the finance ministry, said the central bank’s ability to intervene in the foreign- exchange market is “limited.” Indian currency tracing sluggish local equities and weak regional counterparts neared its all time low level as deteriorating macroeconomic conditions sapped the demand for emerging markets currency including that of rupee. Additionally, dollar demand on back of its strength overseas also added to the turmoil of the Indian currency. On the global front, euro slipped on Monday as investors sought growing yield premiums to hold Italian and Spanish bonds versus benchmark German debt, reflecting worries that wrangling between European leaders will protract the bloc's debt crisis.

Finally the rupee ended at 52.12, weaker by 40 paise from its previous close of 51.72 on Friday. It has touched a high and low of 52.15 and 51.46 respectively. The Reserve Bank of India's reference rate for the dollar stood at Rs 51.71 and for Euro it stood at 69.88 on November 21, 2011. While, the RBI's reference rate for the Yen stood at 67.31 and the reference rate for the Great Britain Pound (GBP) stood at 81.4173. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

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