Rupee ends at record closing low of 61.65
The rupee dropped to a record low of 62.03 per dollar on Friday, sparking late intervention from the central bank as its measures to tighten capital outflows raised concerns they could spook foreign investors.
The Reserve Bank of India late on Wednesday unveiled rules to restrict how much its citizens and companies can invest abroad and announced additional curbs on gold imports.
The steps raised concerns of outright capital controls that would further undermine the confidence of foreign investors and also that they did not address the need to attract overseas investments to narrow the record high current account deficit.
Concerns that foreign investors would sell were also reinforced after upbeat U.S. jobless claims data on Thursday suggested an early end to the Federal Reserve's asset purchases.
"I am not surprised to see the rupee continuing to fall," said Suresh Kumar Ramanathan, regional fixed income and currency strategist for CIMB in Kuala Lumpur.
"The natural action should be to provide additional local flows and liquidity. That never came by, so India is paying for it now," he added.
The partially convertible rupee closed at 61.65/66 per dollar compared with 61.43/44 on Wednesday. Financial markets were closed on Thursday for a national holiday. On the week, the rupee fell 1 percent.
Shares fell 4 per cent, marking their biggest single-day drop in almost two years, as blue chips including HDFC Bank were hit across the board on fears U.S. stimulus tapering would hit foreign selling.
The benchmark 10-year bond yield rose 38 basis points to 8.88 per cent on the day, its biggest single-day rise since July 16.
The rupee dropped to a record low of 62.03 per dollar on Friday, sparking late intervention from the central bank as its measures to tighten capital outflows raised concerns they could spook foreign investors.
The steps raised concerns of outright capital controls that would further undermine the confidence of foreign investors and also that they did not address the need to attract overseas investments to narrow the record high current account deficit.
Concerns that foreign investors would sell were also reinforced after upbeat U.S. jobless claims data on Thursday suggested an early end to the Federal Reserve's asset purchases.
"I am not surprised to see the rupee continuing to fall," said Suresh Kumar Ramanathan, regional fixed income and currency strategist for CIMB in Kuala Lumpur.
"The natural action should be to provide additional local flows and liquidity. That never came by, so India is paying for it now," he added.
The partially convertible rupee closed at 61.65/66 per dollar compared with 61.43/44 on Wednesday. Financial markets were closed on Thursday for a national holiday. On the week, the rupee fell 1 percent.
Shares fell 4 per cent, marking their biggest single-day drop in almost two years, as blue chips including HDFC Bank were hit across the board on fears U.S. stimulus tapering would hit foreign selling.
The benchmark 10-year bond yield rose 38 basis points to 8.88 per cent on the day, its biggest single-day rise since July 16.
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