Rupee drops 20 paise to 54.82 on RBI governor comments

The Indian currency dropped 20 paise 54.82 in trade today, as comments from the RBI governor Subbarao on monetary easing continued tensions with Pakistan along the border led to a fall in the currency.

India's inflation has come off a peak but is still high, Bloomberg quoted the Reserve Bank of India Governor D. Subbarao as saying, which led to pressure on the currency.

Rising tensions along the border with Pakistan also led to a drop in the rupee. The rupee is expected to remain vulnerable to sensitive news given that fundamentally the currency is still weak, given the huge current account deficit.

Markets are worried that should the inflow from foreign funds into Indian equities dry up there cold be a sharp drop in the rupee.

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