Domestic bond yields also retreated, while stocks fell, on the last day of a rough month for Indian markets, as the weak sentiment from the euro zone woes has exposed the country's fiscal and economic vulnerabilities.
The perception of slowing policy reforms has further compounded the losses. A nationwide strike is planned for Thursday to protest the government's recent decision to allow petrol prices to be hiked, an action that at first had been welcomed by markets as a gesture of fiscal consolidation.
The rupee's fall to all-time lows has set up expectations about potential intervention from the Reserve Bank of India, though most traders said they had not spotted any significant dollar-selling via state-run banks on Thursday.
"In a gaining dollar scenario, it is difficult for any currency to hold its position.
Exporters also seem to be holding back and positioning for a further fall," said Naveen Raghuvanshi, associate vice president of foreign currency trading at Development Credit Bank.
At 10:05 a.m., the partially convertible rupee was at 56.38/39 per dollar, after falling to a record low of 56.52 in early trade. The rupee closed at 56.23/24 on Wednesday.
The falls have been sparked by a faltering euro as investors worry that Spain will need outside assistance to fix its public finance and banking system.
The rupee's previous all-time low of 56.40 had been set just a week ago, the culmination of a string of record lows for the local currency, despite suspected frequent intervention from the RBI in both spot and forward markets.
The rupee is the worst-performing Asian currency this year, and is down more than 6 per cent in May, and on course to its biggest monthly fall in six months.
The BSE Sensex fell 1 per cent, after having fallen 6.7 per cent this month as of Wednesday's close, though the fall was not as steep as the 11.8 per cent drop seen in a broader MSCI index of Asia-Pacific shares excluding Japan.
India's 10-year bond yield was at 8.49 per cent, down 3 basis points on the day.
India is expected to say its economy grew at 6.1 per cent in the January-March quarter, the slowest in almost three years.
That will further complicate matters for the RBI, which is faced with growing calls for more rate cuts despite its continued concerns about inflationary pressures.
The RBI delivered a 50 basis point cut in the repo rate last month, but analysts had expected the central bank from refraining to further lower India's main lending rate until later in the year.
Posted in: Business
0 comments:
Post a Comment