The close of business on Monday, August 19, 2013 saw the Indian Rupee at an all- time record low against the dollar. It sunk 2.3 percent and fell to an exchange rate of 63.13. It was the largest single day loss in two years and it marks a low point for India’s currency.
India’s reserve bank enacted countless measures to prop up the Rupee, but none have succeeded in stopping the currency’s free- fall. “These steps are not helping the rupee, instead proving counterproductive," said market traders in Mumbai.
India’s economic maneuvers have also been blamed for pushing interest rates higher. The yield on government bonds rose sharply to 9.25% during the day’s events. The yield was only 8.8% on the previous Friday.
The Indian stock market also took a hit, plummeting 460 points or 2.47 percent in midday trading.
Other emerging economies also watched as their currencies took a stinging blow. Brazil’s Real and South Africa’s Rand also took bit hits as expectations of an American withdraw of its monetary stimulus is causing holders of these foreign currencies to sell. Investors are getting out of these foreign currencies in large numbers before the bottom potentially falls out.
Economic leaders in India plan for more rounds of changes to prop up the currency, but many feel the exchange rate has not yet bottomed out. Analysts fear the Indian Rupee may fall even further before it begins a slow recovery.
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