Rupee Drops to Record Low After Fed Cuts Growth Estimate
The Indian currency touched 56.5550 per dollar and closed 0.3 percent weaker at 56.3075 at close in Mumbai, according to data compiled by Bloomberg.
The Fed said yesterday U.S. economic growth in 2012 would be between 1.9 percent and 2.4 percent, from an April projection of 2.4 percent to 2.9 percent. Reserve Bank of India Governor Duvvuri Subbarao said on June 19 the central bank may have to sacrifice expansion to temper inflation. Overseas investors sold an average $113.3 million more local equities a day than they bought this month, compared with net sales of $112.5 million in May and $203 million in April, exchange data show.
“There is sustained weakness on the global macroeconomic economic front and positive developments aren’t likely,” said J. Moses Harding, executive vice-president at IndusInd Bank Ltd. in Mumbai. “The rupee’s weakness will persist.”
Asia’s third-largest economy expanded 5.3 percent in the first quarter from a year earlier, the slowest pace in nine years, the government said on May 31. Wholesale prices rose 7.55 percent in May from a year earlier, after gaining 7.23 percent in April, official data show. Policy makers need to curb inflation, which is at “disturbing” levels, the RBI’s Subbarao said in a June 19 speech in Mumbai.
Three-month offshore non-deliverable forwards traded at 57.46 a dollar, compared with 57.29 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.
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