The Indian Rupee has fallen to a new record low against the US Dollar as concern grows that measures imposed by the Indian Central Bank will make foreigners rethink their plans to invest in the country.
In early trading the Rupee breached the previous record low of 62 to the US Dollar before recovering slightly. The decline came after the Indian government imposed restrictions on capital exiting the country. Investors warned that the move is more likely to generate panic rather than provide a long-term solution to the currency’s problems.
On Wednesday the Reserve Bank of India reduced the amount of outward investment by both individuals and companies to a quarter of its previous level. With markets closed on Thursday for the Independence Day national holiday, Friday was the first chance currency markets have had to react.
“The RBI steps might be perceived as being regressive and tantamount to quasi-capital controls. Despite being put forth as a temporary measure, uncertainty over more such action is likely to remain and possibly lead foreign investors to rethink plans to invest on fear of controls” said Radhika Rao, an economist at DBS Bank Ltd.
The Banks measures have been criticised by economists with some labelling them as ‘plumbing measures’ a temporary fix that will not solve the issue.
Also weighing heavily upon the Rupee is the increased speculation that the US Federal Reserve will begin to taper its monetary easing programme in September. The speculation was increased after yesterday’s jobs and house data came in above economist expectations.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 96.4450 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 82.3152 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 61.6962 >
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 55.6402 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 49.9121 >
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 59.8785 >
(Correct as of 10:55 am GMT)
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