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Sinking Rupee

September 8, 2013 Leave a comment Go to comments

If you are revising exchange rates here is a video clip from AlJazeera. India’s rupee has plunged more than 3.6 percent to a new record low against the US dollar amid deepening economic woes.

The rupee, one of Asia’s worst-performing currencies this year, breached 68.75 against the dollar in morning trade on Wednesday, after sliding three percent a day before.

The rupee has now fallen about 19 percent so far this year, by far the biggest decliner among the Asian currencies tracked by Reuters. The need to attract foreign capital is critical for a country whose record high current account deficit is a key reason behind the rupee’s slump.

Yet policymakers have consistently struggled to come up with measures that can convince markets they can stabilise the currency and attract funds into the country.

Those comments came after the government approval of infrastructure projects were overtrumped by concerns about the fiscal deficit after India’s lower house of parliament this week approved a 1.35 trillion rupees plan to provide cheap grain to the poor.

That failure is becoming an increasing source of tension for India at a time when fears of a possible US-led military strike against Syria are knocking down Asian markets, with the prospect that the Federal Reserve will end its period of cheap money as early as next month further raising concerns.

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