Indian rupee breaches 64-level vs US dollar before RBI steps in

Aug 20 2013, 13:35 IST
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Rupee fell to as much as 63.78 to dollar, breaching its previous low of 63.30. (AP) Rupee fell to as much as 63.78 to dollar, breaching its previous low of 63.30. (AP)
SummaryMarkets are bracing for further losses, with 1-month non-deliverable forward trading at 64.71.

reforms to attract more long-term capital.

The rupee's plunge adds to worries about India's ability to fund a record high current account gap and whether Finance Minister P. Chidambaram will be able to meet his goal to pare the fiscal deficit to 4.8 percent of gross domestic product (GDP) this fiscal year.

Rating agency Moody's said that while the rupee depreciation was a new variable for the economy, the factors underpinning it have been incorporated in its investment grade rating for India.

India is at the lowest investment-grade sovereign rating.

"We believe that meeting the fiscal deficit target will be very challenging this year, given lower than anticipated growth holding back revenue growth and steep rupee depreciation raising the subsidy bill on imported goods," analyst Atsi Sheth said in an e-mailed reply to queries from Reuters.

Bond yields remained at pre-Lehman Brothers-crisis levels for a second straight day. The benchmark 10-year yield was up 20 basis points at 9.43 percent.

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