Indian Rupee Slides To Fresh Record Low Against Dollar
(RTTNews) - The Indian rupee declined to a fresh record low against the U.S. dollar in early deals on Tuesday, as regional equities fell after Moody's Investors Service and Fitch Ratings said they are not satisfied with the outcome of last week's European Union summit.
The rupee also dropped on worries about the domestic economy after government data released yesterday showed India's industrial output contracted 5.1 percent in October, the first drop in over two years.
The rupee touched a fresh record low of 53.345 per dollar, compared to yesterday's close of 52.835.
The Indian currency has lost more than 19 percent against the dollar thus far this year, sparking worries of a capital outflow.
The rupee's relentless slide against the dollar is likely to fuel inflationary pressures in Asia's third-largest economy.
A lower rupee will also increase gasoline subsidy costs in a nation that imports 80 percent of its fuel.
The Indian currency's depreciation has already started pushing up prices in some sectors like automobile, consumer goods, and mobile phones.
State-owned oil marketing companies, which sell diesel and cooking fuels at government-controlled prices, are also piling up revenue losses as a falling rupee is pushing up the cost of oil imports.
Every rupee's fall against the dollar increases the combined gross revenue loss for Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd by a staggering 8,000 crore.
Indian authorities have recently taken steps to attract foreign capital portfolio inflows and made it easier for Indian firms to hedge their currency risks, but most analysts now expect tougher measures.
Meanwhile, market participants eagerly await November inflation numbers that will be out tomorrow for cues about the Reserve Bank of India's policy moves at the upcoming policy meeting later this week.
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