Rupee drops 44 paise as trade deficit widens

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 Rupee drops 44 paise as trade deficit widens
The trade deficit which came in at a seven month high, saw escalated drop in the Indian rupee, which dropped 44 paise in early trade at 58.31. against the Dollar.

Dealers say that the trade deficit numbers were ugly, prompting fresh demand for the dollar. A nearly 90 per cent jump in gold imports in May was the prime reason why India's trade deficit spiralled, pushing the rupee lower.

Also, foreign funds are beginning to net sell in Indian equities, which is doing more harm to the rupee. They have been net investors for several months now in Indian equities.

The currency and equity markets are awaiting the Federal Reserve Chairman, Ben Bernanke's comment after the Fed meeting later this week. Any hints of QE withdrawal could see the dollar gain in strength vis-a-vis major currencies, Including the Indian rupee.

Read more about: dollar, currency
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