The Indian currency "Rupee" fell to a historic low again on Wednesday pulling to Indian bourses below 2 percent in the absence of strong measures by the government.
On 28 August 2013, Rupee broke 18-years low record and breeches to lowest 68.75 against dollar.
On Wednesday Indian currency fell to 2.50 from Tuesday’s close of 66.25 to 68.75 against US Dollar due to various factors that are affecting the Indian currency very badly.
The slump at the inter-bank foreign exchange market here surpassed the previous low of 66.25 recorded Tuesday.
The rupee was hovering at the 68.20 level around 11.30 a.m. The rupee had closed Tuesday at 66.25 - a depreciation of 2.36 percent from its Monday's close of 64.72 against the dollar.
According to currency analysts, the growing demand for the US currency from importers and a lack of foreign investors' interest in a weak economy is the main reason for the depreciation.
The high month-end demand from oil importers and private orders worth $300-$400 million in the start of the day's trade also escalated the dollar demand.
Concerns have been raised over the widening of the fiscal deficit as the lower house of parliament Monday passed the National Food Security Bill, whose implementation will cost nearly Rs.1.3 lakh crore ($20 billion).
Lack of confidence in the Indian economy has also undermined the rupee's value. There are concerns over the soon to be released first quarter gross domestic product (GDP) numbers which are expected to be below expectations.
The sliding of Rupee continues despite frantic attempts by the government and central bank to support it and repeated comments by the finance minister that the rupee is oversold.
Traders have now set their sight at around 70 levels to be breached soon in the absence of strong steps by the government and the central bank.
On Tuesday, Finance Minister P Chidambaram said there is need to "be patient and firm" and the government is doing what is required to be done.
"Rupee will find its appropriate value," he added
The government is considering currency swaps to bolster the reserves, but currency experts said the move is unlikely to help.
Traders also attributed month-end dollar demand from imports and sustained foreign selling in equities by FIIs for the sharp plunge in the rupee.
Today's fall in the rupee comes after the currency posted its biggest percentage fall in 18 years. The rupee has lost 17 per cent against the dollar so far this year - making it the worst performer by far among Asian emerging market currencies.
The free fall in rupee also led to heavy selling in the equities markets. The benchmark index of the Indian equities markets fell by more than two percent.
The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 17,851.44 points, was trading at 17,696.46 points around 12.00 p.m., down 271.62 points or 1.51 percent from the previous day's close at 17,968.08 points.
The Sensex touched a high of 17,851.44 points and a low of 17,448.71 points during trade so far.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) lost 97.65 points or 1.85 percent down at 5,189.80 points.
Asian markets traded sharply lower, with Japan's Nikkei hitting falling 2.4 per cent to a two-month low.
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