Rupee tanks again; hits lifetime low of 56.40

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Rupee tanks again; hits lifetime low of 56.40
The freefall in the rupee continued with the currency dropping to a new low of 56.40 against the dollar. The currency was trading at Rs 55.97 against the dollar at 3.30 pm IST. Persistent and large scale demand for dollars, once again was responsible for the drop in the rupee. Dealers said that crude oil importers continued to have large chunks of dollar demand, which forced a further drop in the rupee today.

The rupee has been falling dramatically and though the RBI has taken a series of measures, the rupee has failed to recover.

The fall has also been steep and sudden and has sent alarm bells within the government. The falling rupee has already prompted the government to hike the prices of petrol.

The RBI measure asking exporters to sell dollars in exporter accounts have failed to stop the rupee from falling. Earlier, the RBI had announced a hike in FCNR deposit rates to bring in more dollars. In December it had freed interest rates on NRE deposits on hopes that there would be renewed supply of dollars.

However, analysts believe these are likely to only provide temporary respite, as the falling rupee has more to do with poor economic fundamentals.

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