Indian rupee crisis escalates, forces FM P. Chidambaram, top officials into huddle

Written by PTI | New Delhi | Updated: Aug 22 2013, 03:43am hrs
BusinessContinuing its downward spiral, the BSE Sensex tanked by 340 points at the close of the trade.
Amid a continued slide in the value of Indian rupee and stock market crash, Finance Minister P. Chidambaram for the third day in a row held meeting with top officials and Reserve Bank of India (RBI) Governor-designate Raghuram Rajan to take stock of the situation.

Measures taken to stem Indian rupee fall: P Chidambaram

The minister also met with India's executive directors at the three multilateral agencies - Mukesh Prasad (World Bank), Rakesh Mohan (International Monetary Fund) and Umesh Kumar (Asian Development Bank) amid speculation that the country might approach the IMF for loan.

These meetings, which were attended by Economic Affairs Secretary Arvind Mayaram, Revenue Secretary Sumit Bose and Financial Services Secretary Rajiv Takru, come in the backdrop of rupee plunging to all time low of 64.54 to a dollar in the intra-day trade.

Indian rupee plunges to historic low of below 64.52 against US dollar

Continuing its downward spiral, the BSE Sensex today tanked by 340 points at the close of the trade.

The 30-share Sensex opened at 18,545.44 and rallied more than 300 points from yesterday's close to a high of 18,567.70 before declining to a low of 17,807.19. It closed at 17,905.91, a loss of 340.13 points, or 1.86 per cent, the lowest level since September 11, 2012.

While the stock market crash is being attributed to global factors, the widening Current Account Deficit (CAD) is impacting the value of rupee.

When asked whether the rupee fall was on account of speculation in the domestic currency, Mayaram quipped, "people who are speculating on rupee are hurting themselves".

A sliding rupee has made imports costlier and will have implications on the subsidy bill of the government.

Chidambaram had stressed that CAD would be brought down to USD 70 billion this fiscal from USD 88.2 billion in the previous year and steps would be taken to increase foreign fund inflows.

Although the RBI and the government took series of steps to arrest fall of rupee, the decline seems to be continuing unabated.