Thaindian News

Mumbai, May 23 (IANS) The Indian rupee breached another psychological level of 56 against a dollar Wednesday and plunged to a low of 56.18 in the intra-day, hitting a record low for the sixth session in a row.

The partially convertible rupee hit a low of 56.18 in the intra-day before closing at 56 against a dollar, due to persistent demand for the American currency from importers and banks amid rising risk aversion in the global markets.

The Indian currency has hit new intra-day low for the sixth consecutive session. It had hit a record low of 55.40 against a dollar Tuesday.

The rupee has weakened by over three percent in just three sessions this week despite assurances and interventions in the currency markets by the Reserve Bank of India.

Finance Minister Pranab Mukherjee expressed disappointment over the sharp drop in the value of the rupee.

Mukherjee blamed global uncertainties and rising oil imports bill for the battering of the Indian currency. “Quantum of India’s oil imports is substantial at around $160 billion to $170 billion annually,” he said.

The American dollar has strengthened against major global currencies including euro and Japanese yen.

However, the Indian currency is the worst hit. It has lost nearly 23 percent of value against the dollar since the beginning of this year, the worst performance among major global currencies.

Indian stocks markets have also come under pressure due to the persistent slide in the value of rupee.

The benchmark Sensex of the Bombay Stock Exchange slipped below the 16,000-point mark. The index ended the day 0.49 percent lower at 15,948.10 points Wednesday.

The wide-based Nifty of the National Stock Exchange fell 0.51 percent at 4,835.65 points.

Addressing the officers of the Indian Economic Service, Mukherjee expressed hope that the current phase of economic difficulties would be over soon given the resilience of the Indian economy.

“We will be able to overcome successfully the difficulties presently facing the Indian economy so as to get it back to the path of higher growth trajectory,” he said.

Chairman of the Prime Minister’s Economic Advisory Council C. Rangarajan said the RBI would announce new measures to boost foreign funds inflow.

Rangarajan said selling dollars directly to oil importers was an option the central bank might want to consider.

The Reserve Bank of India (RBI) has taken a series of measures in the last few weeks to curb the rupee slide.

The RBI has asked banks to sell half of the foreign currencies in their accounts. In a bid to attract money from overseas, the RBI has raised interest ceiling that local banks can offer to overseas Indians in forex accounts.