Rupee continues free fall; plunges to 65.56 against dollar

The Indian rupee Thursday slipped below the psychological level of 65 against a dollar, hitting new lows for the fifth straight session, after the US Federal Reserve hinted it would start scaling back of stimulus as early as next month.

The partially-convertible rupee slumped by 2.2 percent to hit a new record low of 65.56 against a dollar at the inter-bank foreign exchange market here, surpassing its previous record low of 64.54 touched Wednesday.

This is the sixth straight session of weakness in the value of Indian currency. The rupee has touched new lows for the fifth session in row.

The rupee had declined 86 paise to close at 64.11 against a dollar Wednesday.

The Indian currency was battered, tracing weakness in major Asian currencies after the US Federal Reserve indicated that it would start tapering stimulus soon and as early as next month.

Scaling back of stimulus would lead to further outflows of money from the capital markets putting further pressure on the currency.

Currencies of other emerging markets, including Indonesia, Malaysia and Thailand also hit multi-year lows on the US Federal Reserve move.

The Indian currency remains under pressure despite interventions from the central bank and the government to prop up the rupee.

The Reserve Bank of India (RBI) has taken a slew of measures in the recent weeks to bolster the currency. The central bank Tuesday announced measures to tighten cash conditions and support longer-dated debt.

The RBI has also simplified rules to attract money from Non-Resident Indians (NRIs) and portfolio investments like equities and debts.