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Rupee dips to 64.54 against US dollar; Sensex below 18,000 points
Wednesday August 21, 2013 8:08 PM, IANS

Despite interventions from the central bank and the government, the rupee Wednesday continued its free-fall mode, hitting a new record low of 64.54 against a dollar and benchmark Sensex slipped below 18,000 points mark for the first time in almost a year.

The rupee, savaged by large dollar demands from banks and importers, has plunged to new lows for the fourth session in a row, while the Sensex has shed nearly 1,500 points.

The last four sessions of slide has eroded almost $100 billion of the Indian stock market's capitalisation.

The partially-convertible rupee slipped to 64.54 against a dollar at the inter-bank foreign exchange market here, surpassing its previous record low of 64.13 hit Tuesday.

The rupee had recovered and closed at 63.25 against a dollar Tuesday after the central bank's interventions in the currency markets.

The Indian currency closed below 64 level against a dollar for the first time. It ended the day at a record low of 64.11 against a dollar, 86 paise lower than the previous day's close at 63.25. There was a volatile trading in the currency markets and the rupee touched a high of 63.11 in the intra-day.

Bearish trend continued at the stock markets. Key indices, including the benchmark Sensex of the Bombay Stock Exchange and Nifty of the National Stock Exchange, ended the day with loss of nearly two percent.

The Sensex closed 340.13 points or 1.86 percent down at 17,905.91 points. The index has lost 1,450 points in the last four sessions.

Nifty also ended the day sharply down for the fourth straight session. The index closed 1.83 percent or 98.90 points down at 5,302.55 points.

The Indian currency as well as equities markets witnessed nervous trading ahead of the US Federal Reserve report on stimulus policy.

"Undoubtedly the rupee is a bear mode, the reasons responsible along the US plan to taper quantitative easing (QE), is the negative sentiment in the local markets," said India Forex Advisors.

"Even after getting decent trade deficit figures from last couple of months, still the dagger continues to hover over rupee. The national politics along with no policy support from the central government is ruining the days for the local unit," it said.

According to Deutsche Bank, the rupee is expected to touch a low of 70 against a dollar in a month's time.

"We now believe that the rupee could touch 70 to the USD in a month or so, although we expect some revival of the currency by the end of the year," the German bank said in a report.

The Reserve Bank of India (RBI) has taken a slew of measures in the recent weeks to prop up the currency. The central bank Tuesday announced measures to tighten cash conditions and support longer-dated debt.

The RBI has also simplified rules to attract money from Non-Resident Indians (NRIs) and portfolio investments like equities and debts.

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