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Indian rupee hits record closing low

India’s rupee sank to a record closing low of 53.92 against the dollar on Monday, dragged down by weak domestic economic data and an investor flight to safety on jitters over the eurozone debt crisis.

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The unit hit an intraday low of 53.96 against the dollar — a level last seen in December — which traders said likely prompted India’s central bank to intervene in forex markets to prevent the rupee breaching the key 54 level.

Traders say the central bank appears to have intervened to sell dollars more than a dozen times this year in a bid to curb the currency’s fall. The bank has a policy of not commenting on its actions in the forex market.

“The falling rupee is a sign of worry. It is in a bearish zone due to global pressures,” said Naveen Mathur, associate director of commodities and currencies at Mumbai’s Angel Broking.

The unit was weakened on Monday by data showing annual inflation unexpectedly accelerated in April to over seven per cent, reducing chances of swift interest rate cuts to boost slowing economic growth.

The currency also been hurt by global uncertainty, flagging domestic indicators, slowing overseas funds inflows and pressure from oil importers, who must exchange rupees for dollars when they buy crude.

India imports four-fifths of its crude oil needs. Analysts say the rupee could hit new lows in the coming days due to gloomy economic conditions.

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