The partially convertible rupee fell below the psychological mark of 60 against the US dollar in afternoon trade on Tuesday, after Reserve Bank of India (RBI) governor Duvvuri Subbarao said cited various risks that could hamper India's economic growth.
In Its first quarter monetary policy review, the RBI refused to make any change in its key policy rates, while cutting its forecast for economic growth for the financial year 20113-14 from 5.7 per cent to 5.5 per cent.
The rupee slipped to 60.11 against the US dollar as of 3:00 pm on Tuesday. It was the currency's lowest level against the greenback in the past three weeks.
In the first week of this month, the rupee slipped to a record low of 61.21 on the back of outflows of money on rumours that the US Federal Reserve would soon begin rolling back its quantitative easing policy.
Mr. Subbarao said that both domestic and international uncertainties were posing as a deterrent to the country's economic growth.
The central bank noted that the country's massive current account deficit (CAD) and dependence on external flows for financing would continue to keep it vulnerable to weak international financial markets. The deficit touched 4.8 per cent of the country's gross domestic product in the last financial year, well above the acceptable level of 2.5 per cent.
Source: Top News