Mumbai,
June 21: The Indian rupee slumped to a record low of 56.57 against a
dollar Thursday due to increased demand for the American currency by oil
importers and capital outflows from the equity markets.
The partially convertible rupee was trading weak for the fourth consecutive session.
The
rupee opened weak at 56.40 against a dollar and hit a record low of
56.57 at around 1.23 p.m. at the Interbank Foreign Exchange market,
breaching its previous record low of 56.52 set on May 31.
This
is the fourth consecutive day of drop in the value of the rupee. The
value of the Indian currency has declined sharply since Fitch cut its
outlook on India's sovereign ratings to "negative" from "stable".
Fitch
has become the second credit ratings agency after Standard and Poor's
to cut its outlook threatening India's investment grade ratings.
Both these agencies assign India the lowest investment grade.
In
its mid-quarterly review of the monetary policy announced June 18, the
Reserve Bank of India also disappointed the markets by keeping interest
rates unchanged.
RBI Governor D. Subbarao said early this
week that the central bank would intervene in the currency markets only
to contain volatility of rupee.
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