Mumbai: The Indian rupee hit yet another record low on Tuesday, falling below 64 against a dollar for the first time on continued weakness in equities market.
The partially convertible rupee touched a low of 64.04 in early trade at the inter-bank currency market here, surpassing the previous record low of 63.30 on Monday.
Indian stocks tumbled for the third day, with the benchmark index poised for an 11-month low, after the nation's currency sank to a record low.
Indian shares, which fell nearly four percent on Friday, plunged another 1.30 percent to 18,356.54 points with nervousness setting in over the future of the currency as foreign investors pull out cash.
Dealers said they feared the rupee could weaken further on concerns that central bank measures taken over the past three months would not help the ailing currency.
Last Wednesday, in the latest of a series of measures to prop up the currency, India’s central bank spooked investors when it tightened controls on the amount of money Indian firms and individuals can send abroad.
The move has been criticised as a disturbing throwback to the days before India unleashed its economic liberalisation drive in the early 1990s when Indians’ access to foreign exchange was strictly limited.
In the past few weeks, Indian policymakers have hiked short-term interest rates, announced plans to allow state firms to raise foreign funds abroad, and curbed gold imports.
Emerging market currencies have been hit by the prospect of the United States rolling back stimulus measures that have been responsible for huge inflows of foreign investment into them.
India relies on foreign capital to fund a large current account deficit.
Sonam Udasi of IDBI Capital Markets said: “For all investors, growth remains the most critical issue. Until that gets back on track, the nervousness will remain.”
India’s growth has slackened sharply to a decade-low of 5.0 percent in the year to March amid a sharp slowdown in industrial activity.
Since June 1, overseas funds have pulled out $11.58 billion from India’s stock and debt markets.
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