Rupee slips to another low ahead of US Fed meeting

Mumbai  :  The Indian rupee fell to 58.91 against a dollar Wednesday, fractionally less than the record low of 58.98 hit last week, on concerns that the US Federal Reserve might signal cutting back on stimulus that will strengthen the greenback further.

The partially convertible rupee opened weak at 58.82 against a dollar after hitting a record closing low of 58.77 in the previous day.

The rupee hit a low of 58.91 and high of 58.60 in the intra-day. The currency was trading at 58.74 around 2 p.m. Indian Standard Time (IST).

The Indian currency has lost nearly six percent of its value in the past one month, due to lingering worries over the country’s current account deficit. The rupee hit the lowest so far of 58.98 against a dollar June 11.

India’s trade deficit widened to seven-month high of $20.14 billion in May, due to sluggish exports and higher imports, notably of gold and silver, according to data released by the commerce ministry Monday.

High trade deficit will put further pressure on the country’s current account deficit, which touched a record high of 6.7 percent in the quarter ended Dec 31, 2012.

Strengthening of US dollar against the major global currencies including euro, British pound and Japanese yen, is another important reason for the weakness in the value of the Indian rupee.

The US currency has strengthened after Federal Reserve chairman Ben Bernanke’s recent comment in which he had signalled cutting back on stimulus.

The US central bank Federal Reserve is scheduled to hold a meeting later in the day and announce the policy statement around 11.30 p.m. IST in Washington.
Photo  : AFP