The rupee hit 13-month lows and bonds plunged as markets in the region tumbled on fears about the global economy, raising doubts about whether India can afford to cut interest rates given risks that such a move could trigger foreign outflows. Benchmark 10-year bonds fell the most in more than 8 months, while the rupee hit a session low of 63.70, its weakest against the dollar since November 13, 2013, when India was in the midst of its worst currency turmoil since a 1991 balance of payment crisis.
Traders cited sporadic dollar selling by the Reserve Bank of India to prevent excessive volatility in the rupee, although most described the interventions as mild. Trade Secretary Rajeev Kher said he was not too concerned about the rupee's falls to around 63 to the dollar, while a central bank official told Reuters "it is still not an alarming situation". "I feel that if the rupee falls further down or stays for too long at this point, it should give me a reason to feel a little more concerned," Kher told reporters in a news briefing in Mumbai. The partially convertible rupee fell to 63.53/54 per dollar, down 0.9 percent from its Monday close of 62.94/95. Over the last two days, the unit has dropped 2 percent, posting its worst two-day losing streak since September 4, 2013.
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