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Heightened risk aversion drags rupee to an all time low

13 Dec 2011 Evaluate

Indian rupee slumped to an all-time low  on Tuesday as murky domestic factory output data amidst worries over Europe's debt crisis, dampened global risk appetite, thereby triggering a scramble for dollars. The beleaguered currency has been under pressure due to rising import bill and slowing export growth, which is expected to swell the current account deficit to $54 billion by the end of March. India imports more than three-quarters of its oil requirements and local refiners are the biggest buyers of dollars in the domestic currency market.

Meanwhile, subdued local equities and regional counterparts have also been an overhang for Indian currency. On the global front, the euro plumbed two-month lows in Asia on Tuesday as rising disappointment over the European Union's summit prompted investors to position for possible downgrades of euro zone sovereign credit ratings. Rating agencies warned on Monday that last week's EU summit, viewed by some as a last chance to save the euro, did not go far enough to ease immediate concerns about the region's debt markets

The partially convertible currency is currently trading at 53.40, weaker by 56 paise from its previous close of 52.84 on Monday. The Indian currency has touched a high and low of 53.42 and 53.10, respectively, so far. The Reserve Bank of India's reference rate for the dollar stood at Rs 52.42 and for Euro it stood at 69.94 on December 12, 2011. While, the RBI's reference rate for the Yen stood at 67.52 and the reference rate for the Great Britain Pound (GBP) stood at 81.9227. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

Date1US$1GBP
December 12, 201152.4281.9227
December 9, 201152.22 81.5496
RBI-Reference Rate

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