India’s currency continued its free fall on Tuesday to touch yet another record low. There was little good news out of India and a Fitch downgrade of Japan didn’t help. The rupee ended trade at 55.39/40 to the US dollar after falling even further in early trade. All in all, the rupee has fallen some 8% this quarter. Traders believe some early gains on Tuesday morning were fuelled by dollar selling from the Reserve Bank. Two weeks ago, RBI had put in place new rules to increase the dollar supply and shore up the rupee.
And amid all the gloom about India’s economy, there’s one spot of hope, though it comes with a warning. The Organisation for Economic Cooperation and Development or OECD released its outlook for the calendar year 2013 on Tuesday. Its report says India’s economy is likely to rise by 7.7% of GDP during that year. But it warns that India’s policy paralysis could hurt its long term prospects. The OECD estimate is a lot more optimistic than most others—which usually fall under the 7% mark.
And finally, Indian markets tumbled on Tuesday, breaking a three-day winning streak. With the rupee falling and investors booking profits, both indices ended in the red. The Sensex plunged 157 points to 16,026. And the Nifty lost 46 to 4,860.