Mumbai, 28 Aug (PTI): The rupee’s plunge continued unabated, touching a new low of 68.85 against the dollar on mounting concerns over fiscal deficit, but stock markets scripted a dramatic 547-point rebound. On the other hand, gold prices soared by Rs 2,500 – the largest increase in a day – to scale a new peak of Rs 34,500 in Delhi’s bullion market as investors rushed to buy the precious metal whose costly imports have contributed to the widening of the country’s current account deficit (CAD).
The rupee collapsed to a lifetime low of 68.85 against the dollar and closed at 68.80, registering the biggest single-day loss of 256 paise, as oil prices jumped due to the Syria crisis, adding to concerns about the CAD and capital outflows.
“This is an irrational sentiment. It will correct itself. It is important to stay on the course. There is no need to panic,” Economic Affairs Secretary Arvind Mayaram said.
Brent crude touched a 6-month high at USD 116 a barrel in London, raising the prospect of a heavier oil bill for India.
In 3 trading days in a row, the rupee has lost 560 paise, or 8.86 percent, against the dollar. So far this calendar year, it has tanked by 1,381 paise or over 25 percent.
The benchmark S&P BSE Sensex ended 28 points higher, staging a dramatic recovery after plunging over 519 points in intra-day trade, after domestic institutional investors like LIC, stepped in to arrest the market slide. The gains were led by IT, metal and teck sector stocks, while public-sector and consumer durable shares fell.
Meanwhile, government Wednesday dismissed fears of any sharp spike in fiscal deficit this year because of the food security programme. Top sources said an estimated Rs 1,27,000 crore for implementing the scheme is for a full financial year and it will be lower in current fiscal as 5 months are already over.
With the rupee breaching 68 levels and the economy staring at harsh economic realities, Bharatiya Janata Party (BJP) said that the government has run out of ideas and should quit. The Left parties attacked the government’s policies and said the country was heading towards an economic emergency.