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INR at fresh all time low of 56.50 vs US dollar

INR trading

INR at a new all time low of 56.50 vs US$.

The INR (Indian rupee) commenced at fresh record low levels on Thursday, May 31, 2012 on surging risk aversion over unrelenting euro zone worries that battered risk sensitive assets. The domestic currency opened lower by 26 paise at Rs 56.50 to a dollar but managed to trim some of its initial drop to touch a high of 56.37 so far during the day. U.S.$ Jun Futures shot up to 56.78 INR from the previous close of 56.44. As alerted earlier, INR may decline further to 58.60 till remains below 56.35 levels.

India’s Gross Domestic Product (GDP) grew by 5.3% in the January to March quarter of FY12 from the year-ago period, after expanding by 6.1% YoY in the third quarter, the Government said. GDP growth in the second quarter stood at 6.7% while the same in the first quarter was at 8%.

With a grim domestic GDP figure, and with inflation soaring in double digits, markets would now turn to the Reserve Bank action next month where the central bank would have to do the balancing act between rising inflation and slowing growth. Meanwhile, post the GDP data, markets have dropped with the benchmark Sensex close to 16,100 levels and rupee continues to hover at fresh record lows near 56.50 levels.

Sliding global as well as domestic shares and a tumbling euro against a surging Dollar weighed down the domestic currency. In the spot currency, the Indian unit was last seen trading at 56.39, down around 15 paise or 0.27% as compared to previous close at 56.24.

The euro hit a near two-year low over mounting concerns Spain may need assistance to fix its leveraged banking sector in a shrinking economy. Surging borrowing costs in troubled Spain heightened fears that more countries in the euro zone will be hit hard by the region’s debt crisis. The euro fell to as much as 1.2357 against the greenback early in Asia and was currently quoting at 1.2388, marginally off early lows.

Weakness continued on the domestic bourse in morning trade as fresh worries about Spain and Italy sparked fears of a deteriorating situation in Europe and rising global uncertainty saw investors dump risky assets. Foreign institutional investors (FIIs) sold Indian shares worth a net Rs 10.75 crore on Wednesday, 30 May 2012, as per provisional figures from the stock exchange. At the time of writing, the BSE Sensex was down 167.33 points or 1.03% to 16,144.82 whereas S&P CNX Nifty was down 47.25 points or 0.95% to 4,903.50.

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