27.5.10

Rupee falls to an 8 month low


The global rush for risk aversion is sending the US dollar from strength to strength against most other currencies, and the Indian rupee is no exception. On Tuesday, the rupee weakened against the greenback by a whopping 72 paise to 47.70, an eight-month low, with economist and analysts expecting some more slide for the Indian currency. On Tuesday, the dollar strengthened against the Euro to about 1.22 level and chartists say its very close to a crucial technical level of 1.21. The US currency strengthened came because of the fresh jitters in the Spanish banking system that has the potential to further weaken the Eurozone. As a rub-off effect — besides the fact that the rupee is also one of the weaker assets in the global set-up — the Indian currency dipped to a low of 47.75 per dollar, its weakest level since October 1, 2009, and closed 1.5% off from its Monday close of 46.98. Rupee weaken against the Euro too, closing at 58.31 compared to 58.04 on Monday .Market players fear further weakness for the rupee, at least against the dollar. But economists feel that the fundamentals for the Indian economy are strong and once the markets stabilise, the rupee will strengthen again.

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