Mumbai: The rupee slipped beyond 56 level as the domestic currency slipped for the third consecutive day as rating agency Fitch lowered the outlook of Indian banks and financial institutions.
The local currency ended the day to close at 56.15 against the dollar, 18 paise lower than Tuesday's close of 55.97. Sentiment was also hit by hard-hitting comments from RBI governor D Subbarao on Monday that growth would have to be sacrificed to bring inflation under check.
The lenders affected by Fitch's rating revision include the State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, IDBI Bank, ICICI Bank, Axis Bank, Export-Import Bank of India, Housing and Urban Development Corporation, Infrastructure Development Finance Company. Following the revision in the ratings, the BSE Bankex, which reflects the movement of bank stocks, fell almost half a percentage point on a day when the sensex closed flat.
The rupee had touched an all-time low of 56.52 against the dollar on May 31. Although there was a marginal improvement in sentiment after an election in Greece brought into power a pro-euro government, domestic issues have been keeping the currency under pressure.
On Tuesday, RBI governor D Subbarao said that it was not RBI's intention to defend the rupee through intervention and that RBI sold dollars only to smooth out volatility. The dollar gained against the rupee even as it weakened against the euro. Markets worldwide saw a minor rally on hopes that the US Federal will come with a fresh stimulus package in its meeting on Wednesday. Dealers said that if Fed disappointed markets there was a possibility that the rupee could open weaker on Thursday.
Sensex ends flat in volatile trade
Mumbai: In choppy trade, the BSE sensex on Wednesday ended 37 points higher at 16,897, led by metal, capital goods and healthcare stocks, with investors tracking firm global trends amid renewed hopes that Federal Reserve would come out with fresh steps to boost the US economy. The sensex had jumped 103 points in the intra-day trade. AGENCIES  |
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