Rupee sinks to new low, breaches 66/dollar

Govt considering currency swaps with other countries

The rupee plunged to a record low, below the key psychological 66 per dollar mark on Tuesday, as a sharp sell-off in shares prompted greenback demand from foreign funds looking to exit the market.

Month-end demand from importers also hurt.

Govt is considering currency swaps with other countries, TV channels Bloomberg TV and CNBC-TV 18 reported on Tuesday, citing senior government officials.

Bloomberg TV said India would set up a task force to look into setting up currency swaps, citing Commerce Minister Anand Sharma. CNBC-TV 18 reported India was considering the swaps with trading partners, citing Trade Secretary S R Rao.

The rupee opened lower at 65 from yesterday's close of 64.30 and continued to slide to 66.06, down by 176 paise. It quoted at 65.97 against the dollar at 1400 hours. The previous lifetime low of 65.56 was reached on August 22.

Month-end dollar demand from importers, mainly oil refiners, and some banks on behalf of their clients put pressure on the rupee.

Dealers said the Food Security Bill, which was passed by the Lok Sabha yesterday, has raised fears that the government might face a higher subsidy burden.

Finance Minister P Chidambaram said in New Delhi today that the currency is undervalued and hoped it will find its appropriate level.

Chidambaram also said the fiscal deficit will be contained at 4.8% of GDP even after doling out subsidies to implement the Food Security Bill.

The rupee has lost more than 16% against the dollar so far in 2013 - making it the worst performer by far among Asian emerging market currencies, according to Reuters.