India’s benchmark equity indices fell to their lowest levels in 20 months as concerns about a global economic slowdown amid slumping commodity prices and a weakening rupee spurred investors to sell shares.
The rupee >breached the 68-a-dollar mark on Wednesday for the first time since August 2013. It closed at a record low of 68.85 a dollar on August 28, 2013, just days before Raghuram Rajan took charge as RBI Governor. Dealers said state-run banks intervened on behalf of the central bank after the currency touched an intra-day low of 68.17 a dollar, helping the rupee close at 67.95, compared with Tuesday’s 67.65.
“The RBI intervened in both the currency futures as well as in the spot market,” said a dealer with a state-run bank. “The intention of the central bank was not to allow the rupee to depreciate at a fast pace.” The central bank always maintains that it intervenes to curb volatility and does not target any level for the rupee.
The rupee has weakened 2.74 per cent so far this year after declining more than 5 per cent in 2015. Still, the Indian currency has performed better than its emerging market peers from Russia, Brazil and South Africa. Dealers said there could be more pressure on the rupee, going forward.
The 30-share Sensex lost a whopping 640 points during intra-day trades on Wednesday to touch a low of 23,839.76. It finally >closed at 24,062.04 , down 417.80 points or 1.71 per cent. This is the lowest close for the Sensex since May 15, 2014, when the benchmark ended at 23,905.60.
