The Indian rupee fell to a record low against the dollar on Thursday, as the euro and other risk assets were hit by disappointment about the size of bond purchases announced by the Federal Reserve and by weak global economic data. The Reserve Bank of India made what traders described as a "mild" attempt at defending the currency early in the session, and some traders said it may have acted again after the currency briefly surpassed the previous record low hit on May 31.
"The RBI's intervention and policies to mitigate the weakness is not the silver bullet to what really is a structural weakness for the currency; ie the twin deficits," said Nizam Idris, head of Asian fixed income and currencies at Macquarie Bank. The rupee fell at one point to a record low of 56.55 to the dollar, surpassing its previous 56.52 low.
The one-month offshore non-deliverable forward contracts closed at 56.71 while the three-month closed at 57.46, implying further losses ahead. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 56.4225 on a total volume of $5.6 billion.