The Indian rupee touched a record low of 57.33 against the dollar in trading yesterday, amid global risk aversion and rising demand for dollars. The rupee opened the day at 56.80 to the dollar and plunged to an all-time low of 57.33 in afternoon trading. It recovered marginally to close at 57.12, down 1.47% from Thursday’s close of 56.30 to the dollar. Analysts said increased capital outflows from equity markets and the rising demand for dollars from oil and gold importers were pulling down the Indian currency. Analysts and traders expect the domestic unit to hover around the level of Rs57-58 to the dollar throughout June amid signs of uncertainty in India’s fiscal and economic outlook, and renewed global risk aversion, the NDTV Profit channel reported. Reserve Bank of India Governor D Subbarao had said on Tuesday that the central bank would intervene in case of volatility in the foreign exchange market. The rupee has been falling for much of the year, after spending most of 2011 at between Rs44 and 45 to the dollar. It fell to Rs53 in December, before gaining strength to around Rs49 in February. Since then, it has plumbed ever lower depths against the dollar, with sharper declines since May. It has depreciated more than 10% since the start of April. In a bid to curb the currency’s freefall, India’s oil secretary said the central bank had asked oil companies to buy half of their dollar demand from public sector banks, the Press Trust of India news agency reported. The rupee has been one of the hardest-hit currencies in Asia, reflecting investor concerns about India’s economy, which is being buffeted by high inflation and slow growth. The economy grew just 5.3% in January to March, its slowest quarterly expansion in nine years. The latest downward spiral in the rupee came after Moody’s on Thursday downgraded the credit ratings of 15 of the world’s largest financial institutions, including Goldman Sachs and Barclays, citing risk exposure and the eurozone crisis. “Risk appetite is reducing at a very fast pace,” said D K Joshi, chief economist with ratings agency Crisil. The rupee trend “will reverse once things stabilise in advanced countries”, he said. “At these levels the Indian market will start looking quite attractive”. The rupee also faced a string of unprecedented lows last month, highlighting the economic drift in the once-booming Asian giant, which is also suffering from troublesome fiscal and current account deficits and a stalled reform agenda. New tax policies seen as hostile to foreign investment have added to the gloomy climate. Ratings agency Standard & Poor’s warned this month that India could be the first of the Brics emerging economies — which also includes Brazil, Russia, China and South Africa — to lose its investment-grade debt classification unless it revived growth and rekindled its reform programme. Fitch Ratings also downgraded India’s credit outlook from stable to negative on Monday, saying the country’s growth potential will deteriorate without a quickening of structural reforms. Meanwhile, Indian equities retreated for the first time in four days after the rupee’s record fall and after reports showed the US economic recovery is slowing. The Sensex has dropped 8% from its Feb. 21 high. The S&P CNX Nifty Index on the National Stock Exchange decreased 0.4% to 5,146.05 and its June futures settled at 5,151.15. India VIX, a gauge of options prices in the Nifty, jumped 3.2% to 20.58, its first advance in six days. The BSE-200 Index retreated 0.3% to 2,082.68. Combined trading volume on India’s top two exchanges was 749mn shares on Thursday, 17% less than the 12-month daily average of 904mn. “The economy is going to struggle over the next six to nine months because growth and the deficits are a concern as the rupee continues to weaken,” Jyotivardhan Jaipuria, head of India research at Bank of America Corp, said in an interview to Bloomberg UTV yesterday. “Rupee depreciation is not something you want if you are a foreign investor because it reduces your return in a market where returns are difficult to come by.”from gulf times.