The rupee today touched a fresh all-time low of 53.71/72 against the dollar, amid continuing capital outflows and further appreciation of the US currency against its major rivals, particularly euro.
After slipping to sub-53 level yesterday, the local currency further plunged to 53.54/55 per dollar in the opening trade at the Interbank Foreign Exchange.
It even inched closer to 54-level intra-day, as it dropped to 53.88 at one point. The local currency finally settled at 53.71/72 a dollar, a loss of 48 paise or 0.90%.
Foreign exchange dealers said persistent dollar demand from banks and importers amid a continued pullout of capital by foreign funds weighed against the rupee.
"The rupee continued its fall today as the dollar strengthened further against euro, breaching the 1.3 level. In addition, inflation numbers for November was not up to market expectations, adding to economic woes, and it pulled down the local currency, Ramesh Krisnan, head of treasury, Dhanlakshmi Bank, said.
The rupee has come under severe pressure, amid strong signs of slowdown in economic growth, a contraction in industrial output, rising fiscal deficit and current account deficit.
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"The country is facing a lot of structural issues like high current account deficit, high trade deficit with a possible slippage of fiscal deficit target. These factors along with negative sentiment in the currency market is dragging rupee down," IDBI Bank Head of Treasury NS Venkatesh said.
Referring to outlook, Venkatesh said, "Present rupee level doesn't support the fundamentals of Indian economy. It's more of a bearish sentiment that is pulling down the rupee. So, rupee will come to sub-50 level by March as structural issues are addressed by the government with some capital inflow measures by the central bank and the government."
Krishnan also said rupee may snap its losing trend soon as 10-year bond yields have touched a high of 8.5% today.