2.6.10

Rupee snapshot

The Indian Rupee was badly battered against the Dollar on Tuesday, weakening by about 80 paise to 47.16 to the greenback, its worst single-day loss in more than 18 months. The weakness in the rupee was mainly on the back of selling by FIIs in the stock market and also the strength of the dollar against most other major currencies, especially the euro. In the forex market, rupee ended at 47.16 to the dollar, down 1.7% from its Monday close of 46.36. The rupee had lost 2.6%, its worst fall, on November 12, 2008, at the peak of the credit crisis after the collapse of Lehman Brothers. In May, Sebi data showed that FIIs have taken out over $2 billion from the Indian stock markets, the biggest monthly outflow since October 2008. This, in turn, has put pressure on the Indian currency. The recent weakness of the rupee was also due to Eurozone worries and the fundamentals that usually decide the strength of a currency have not changed. Hence, economists and analysts feel that the weakness of the Indian currency could be a short-term phenomenon, driven more by global cues. In the international market, the euro fell to a fouryear low against the dollar on Tuesday, again because of fears that the Eurozone’s debt crisis could spread. The Dollar Index, a measure of the strength of the greenback against a basket of currencies, rose to over 87 points, with chartists predicting that the currency would rally beyond 89, its all-time high.

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