The rupee opened at all-time lows against the dollar Tuesday. It traded at 52.63, falling nearly 60 paise or over 1 per cent against the dollar at 1030 hours today. Fresh weakness in the currency came despite a rebound in equity markets. The Sensex and the broader Nifty indices were trading with nearly 1 per cent gains in early trade today.
Meanwhile, Reserve Bank of India Deputy Governor Subir Gokarn today said the central bank will weigh possibilities of action on rupee. He further said that action on rupee was not an easy judgement and such action will be aimed at volatility.
The currency had ended at an all-time closing low yesterday despite reports of intervention by the RBI. The finance ministry's signal that the central bank may not sell dollars "aggressively" to stem the local currency's depreciation also led to the fall.
Criticising the Reserve Bank for not intervening in the currency markets, Dr Surjit Bhalla, Managing Director of Oxus Research and Investments said, "The RBI has intervened several times in the past but in the last six months they have perhaps been preoccupied with different things."
Dr Bhalla said that RBI's move not to intervene would backfire and lead to higher inflation. "If they were worried about inflation, and thought that the rupee was a tool to arrive at controlling inflation, they should have stopped the depreciation because imported goods especially oil cost more."
"It's senseless that we need to be worried about inflation and hence not interfere in the currency markets," he added.
On Monday, the rupee had dropped past 52 a dollar, closing at a record low of 52.15, on strong dollar demand from importers amid worries that foreign investors may flee riskier assets and markets due to the global economic turbulence. The previous all-time closing low of the currency was 51.97 registered on March 3, 2009.
The rupee is now among the top three worst performing currencies globally and has fallen by a whopping 15 per cent since July this year. It is the worst performing currency in Asia, falling 14 per cent through the year.
Source: NDTV
