Rupee dips to record low of 54.42 against dollar

Mumbai, May 16 (IANS) The Indian rupee slumped to a record low of 54.42 against the US dollar Wednesday due to rising concern over fiscal deficit and poor economic outlook coupled with weak global cues.

The partially convertible rupee was trading 1.18 percent down at 54.42 against a US dollar. This is the weakest level of rupee recorded so far.

The earlier record low of 54.30 against a dollar was hit in mid-December last year.

The Indian currency continued to slide despite the Reserve Bank of India's intervention in the markets to control the fall.

The RBI last week asked exporters to convert at least 50 percent of their foreign exchange holdings in rupee. The move is estimated to lead conversion of around $3 billion of foreign currency, especially the US dollar, into Indian rupee.

The central bank has also spent over $20 billion in spot-market intervention since September 2011 to check the rupee slide.

The rupee has slumped almost 10 percent since March, the biggest fall among the major Asian currencies.

The Rupee has weakened due to rising concerns over the country's current account and fiscal deficit. Slowdown in economic growth, high inflation and the perception of policy paralysis has also led to the weakness in currency.

Continued sell-off by the foreign institutional investors led to almost two percent slump in the country's benchmark indices.

The benchmark Sensex of the Bombay Stock Exchange slumped below the 16,000-point-mark. The Sensex was trading 1.93 percent down at 16,013.25 in the afternoon Wednesday.

The wide-based Nifty of the National Stock Exchange was down 1.90 percent at 4,848.90 points.

The latest industrial growth and inflation data has disappointed the market.

As per the data released by the Central Statistics Office last week, India's industrial output shrank by 3.5 percent in March due to poor show of manufacturing and mining sectors. It is the first contraction in the factory output since October 2011, when it shrank by 4.7 percent.

Inflation moved up to 7.23 percent in April as compared to 6.89 percent in the previous month, mainly driven by a sharp increase in the prices of food items, according to data released early this week by the ministry of commerce and industry.

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