Rupee creates history again; drops to lifetime low of 54.96

The rupee made a dash to the 55 levels, with the currency dropping 51 paise against the dollar to trade at 54.96 at 4.30 pm IST. With this the rupee has now hit another record low and may cross the 55 milestone.

Reserve Bank of India is now expected to intervene, to prevent the rupee from sliding past the 55 level. RBI officials have said that they will prevent volatility and not a slide in the rupee, which means in case there is large scale intra day movement, the RBI could step in.

Foreign funds have also not propped up the rupee, as they have been net selling over the last one month.

The rupee would continue to weaken given India's poor fundamentals and weak equity markets due to the ongoing problems in Europe, particularly in Greece where there are fresh elections in June.

The Euro too has dipped against the dollar, dragging other currencies with it. Imported products are now expected to get costlier, though a drop in crude prices has offset a drop in the currency, which is a major respite. However, a drop in gold prices internationally, has not resulted in any benefits to Indians because of the falling rupee.

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