INDIA’S rupee sank to an all-time low against the dollar for the sixth straight day on Wednesday (May 23), breaching 56 for the first time despite likely intervention by the central bank.
The partially-convertible Indian unit fell to 56.18 against the dollar, below its previous record low of 55.46 a day earlier, as demand for the US currency grew.
The Reserve Bank of India (RBI) is thought to have intervened at 55.79, which saw the rupee strengthening to 55.52, before it again sunk.
The bank has a policy of not commenting on movements in the forex market and any interventions.
Domestic problems, including India’s widening trade and current account deficits and declining foreign fund inflows, have depressed the rupee, analysts say.
The rupee, also weighed down by global risk aversion, is among several emerging market currencies which are depreciating against the dollar.
The Indian currency has now fallen nearly ten per cent in the new financial year started in April.
Government advisor C Rangarajan on Wednesday (May 23) said he hoped for the RBI to announce new measures which would help improve foreign funds inflows and reduce strain on the weakening currency.
Rangarajan, the chairman of the prime minister’s economic advisory council, said selling dollars directly to oil importers was an option the RBI may want to consider.
“What is really needed is to revive sentiment to enable large capital foreign flows,” Rangarajan told the CNBC-TV 18 channel.
