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Rupee hits life low of 65.60 despite RBI steps

Last week, RBI restricted how much Indian citizens and companies can invest abroad to reduce pressure on the rupee

August 22, 2013 9:19 IST | India Infoline News Service
The rupee plunged to a record low to 65.60 today. The Reserve Bank of India's move to ease cash conditions after tightening them last month to support the rupee highlights the growing costs to the economy of stabilising the currency.

The partially convertible rupee closed at 64.11/12 per dollar, down 1.3% on Wednesday, as importers led by oil refiners bought dollars.

The BSE Sensex closed down 1.9% as the falling rupee dented investor sentiment.

In its forex report published in the month of July, Disha Bhatt, manager-research department, IIFL, had said that, “Technically, once USD-INR crosses the level of 61.80, it is expected to touch the level of 65 soon.”

“We have achieved our target. Rupee today hit a new record low to 65.02,” Bhatt added.

Deutsche Bank said in a note on Wednesday that the rupee could slide to 70 in a month or so, although some revival is expected by the end of the year.

Last week, RBI restricted how much Indian citizens and companies can invest abroad to reduce pressure on the rupee. The RBI also eased some of the rate limits for deposits targeted at non-resident Indians (NRIs).

The government has also raised import taxes on gold and silver in an attempt to narrow the burgeoning current account deficit. The import duty on gold was hiked to a record 10%, the third such increase in eight months, while duty on silver was hiked from 6% to 10%. The excise duty on gold bars was hiked to 9% from 7%.

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