Rupee sinks below 60

The Reserve Bank of India’s refusal to defend the rupee at 60 — a psychologically important level for many — led to panic in the foreign exchange market on Wednesday afternoon.
Banks rushed to buy dollars after having shorted the US currency on the bet the RBI would continue selling dollars.
As banks covered positions to cut losses, the rupee, already under pressure due to dollar demand from corporates, oil firms and foreign portfolio managers selling Indian securities, plunged to 60.76 before ending the day at 60.73, a new closing low against the dollar.

The RBI’s absence has also emboldened exporters, who are holding back the sale of dollar receivables. Many small importers, operating on thin margins, have been badly hit while some of the jewellers have also taken a knock, having kept imports unhedged while selling exports earlier when the rupee was stronger.
The rupee has lost almost 11% since May and was lower 1.7% from its previous close of 59.67 on Tuesday.