The Indian rupee fell to 44.8 to one US dollar on Tuesday, its lowest since Dec 12, 2006.
NEW DELHI: The Indian rupee fell to 44.8 to one US dollar on Tuesday, its lowest since Dec 12, 2006.
The rupee has been falling since Nov 7, 2007 when it hit a peak of 39.27 to the dollar.
Initially gradually and then from around May this year more rapidly, the rupee has fallen on continuing strengthening of the US currency against all major global currencies.
Traders expected the rupee to fall further as they felt the dollar would continue to strengthen.
Portfolio strategist Manoj Krishnan of Delhi-based Price Investment Management and Research Services, however, felt that that the Indian central bank Reserve Bank of India (RBI) will intervene once the rupee falls below the 45-46 to a dollar mark.
"I expect the RBI to start supporting the rupee once it falls below 45-46 to a dollar," he said.
"Last year everyone believed that the US economy was heading for or was already in the grip of a recession and the dollar weakened. The rupee gained in the process," Krishnan said.
"Now investors have begun to realise it was actually just a slowdown and with the recent federal intervention with regard to US mortgage giants Freddie Mac and Fannie Mae the dollar will strengthen further," Krishnan said.
He was referring to the recent move by the US government to take control of the two ailing mortgage groups that underpin a large section of the American housing market.
The US government has decided to inject up to $100 billion into each group besides offering to lend each institution billions of dollars on preferential terms.
It also said that it would help to boost liquidity in the home loan market by buying mortgage-backed securities.
"These moves will bring down housing loan interest rates in the US and give a boost to the housing market," Krishnan said.
This would definitely help the US economy and in turn strengthen the dollar further, he predicted.
The US federal move has also cheered investors around the world and global share markets jumped Monday in response.
India's benchmark 30-share Bombay Stock Exchange Sensitive Index, the Sensex, rose sharply on Monday by a little more than 461 points to end the day gaining 3.18 percent, though it started falling again on Tuesday.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}