The Indian currency tumbled by Rs. 1.48 to 63.13, the biggest single day drop in a decade
The rupee sank further to breach 63 a dollar on Monday, triggering a further plunge in stocks.
Sensex tanked over 450 points from Friday’s close intra-day to finally close Monday with a loss of 290 points at 18307.52 points. On Friday, it shed 769.41 points. In just two days, it had lost 1,059 points.
The rupee closed at Rs. 63.13, down 2.40 per cent from Friday’s close. The 149 paise fall was the single biggest fall in nearly two years.
As the rupee depreciated sharply, foreign institutional investors (FIIs) rushed yet again to sell stocks to repatriate dollars.
The FII sell-off was caused by fears that the government would come out with fresh measures to choke dollar outflow from the country. The rupee has depreciated by over 13 per cent against the greenback since the beginning of this year.
“FIIs are pulling out and thus there is genuine demand for dollar. This is why the rupee has come under fresh pressure despite all measures being put in place by the RBI. We have never seen such a sharp fall of rupee of almost 3 per cent,” said Pramit Brahmbhatt, CEO, Alpari India, a leading Forex trading house.Crisis of confidence in the Indian economy and doubts over the ability of the government to finance the current account deficit (CAD) also contributed to the rupee plunge, according to foreign exchange experts.
“Everything has been done by the RBI and the Finance Ministry. Even then, the rupee is not getting to the desired level. We all are on a wait-and-watch mode,” said Moses Harding, Executive Director and Chief Business Officer at Laxmi Vilas Bank.