Rupee plunges to life time low

Business

oi-Sneha

By Sneha B K

Published: Wednesday, May 16, 2012, 16:33 [IST]

The rupee dropped sharply by 71 paise and hit a fresh life time low of 54.50 to the dollar at 4.30 pm IST, thus breaching its previous low of 54.30 seen in December 2011.

Weak equities markets, a weak euro and the strengthening of the dollar against other currencies was one of the main reasons for the drop in the rupee.

The rupee's weakening can also be attributed to low FII inflows and weakening of India's economic fundamentals. The rupee had dropped sharply in early trade on Tuesday as well, but recovered by the end of the day on intervention by the Reserve Bank of India.

Analysts believe that the rupee would continue to weaken given India's poor fundamentals and weak equity markets due to the ongoing problems in Europe, particularly in Greece where there is a possibility of a fresh elections in the country.

The Euro too has dipped against the dollar, dragging other currencies with it.

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