Rupee falls to record low at 216.5 to KD
The rupee fell to a record low on Tuesday, showing the month-old cash tightening steps from the RBI have so far failed to prop up the currency.
The rupee was last at 61.42, having breached its previous all-time low of 61.21 seen on July 8. Stocks in realty, capital goods and banking sectors came under pressure in morning trade on Tuesday, weighed down by weakness in the rupee which hit a new record low of 61.42 against the US dollar.
"Basically, we have been concerned about the rupee behaviour for sure and have been observing that the RBI's tight money policy has probably not helped beyond a point," said Deven Choksey, MD, K R Choksey Securities in an interview with ET Now.
"I believe that monetary policy has a very literal role to play unless the real economy starts improving, given the fact that inflows into the real economy are not taking place" he added.
Choksey is of the view that we feel little nervous at this point of time largely on account of rupee, and if it falls further some of the equity portfolios which are packed with rupee they may face selling pressure which could bring the market down further.
Last week, rupee weakened after the Reserve Bank of India (RBI) shied away from stronger measures to boost currency. The central bank said it will roll back its recent cash tightening steps in calibrated manner if the currency stabilises.
The RBI in its first quarter review of monetary policy kept both the repo rate and Cash Reserve Ratio (CRR) unchanged. Traders will continue to monitor comments from policymakers for near-term direction along with strong dollar.
The BSE Sensex dropped over 200 points, while Nifty slipped below its crucial psychological support level of 5650 and was trading near 5600 levels.