MUMBAI: The Indian rupee slumped to approach a record low, falling for a third consecutive session, as fears of continued foreign selling kept the focus on how to finance the country’s record current account deficit.
The rupee tracked other emerging market currencies as new signs of a slowing Chinese growth and a deepening political turmoil in Portugal kept risk aversion high.
India’s benchmark BSE index fell 1.5 percent, erasing its gains for the year, while bond prices fell. Those falls are a concern given foreign funds have sold a net of about $7.5 billion in stocks and debt since the start of June.
India’s current account deficit reached a record high of 4.8 percent of gross domestic product in the fiscal year ended in March, and a weak rupee would aggravate concerns about funding.
The government is expected to soon unveil measures such as opening up more sectors for foreign investment in a bid to attract flows.
“The rupee weakness is more a function of the dollar weakening globally. The trend remains for the local currency to weaken. I do not rule out 60.80-61 levels in the near term unless some big bang reforms come,” said Satyajit Kanjilal, chief executive at ForexServe.
The partially convertible rupee closed at 60.215/225, compared with its previous close of 59.66/67.
