Rupee Down 42 Paise, Steepest Fall in One Year

New Delhi, Jun 5 (KNN) The Indian rupee fell sharply on Tuesday, declining the most in over a year to close at 83.53 against the U.S. dollar, down 42 paise from Monday's close.

The significant decline came as the country's equity markets plunged nearly 6 per cent, with foreign investors believed to have sold holdings amid the volatility.

Government bond prices also fell steeply, with yields on the benchmark 10-year bond rising over 5 basis points to cross 7 per cent.

The rupee's drop followed a period of extremely low volatility in foreign exchange markets, according to analysts. "While equity markets had seen a huge run-up amid recent volatility, volatility in the forex market has been extremely low... it may rise in the short term as political clarity emerges," said Ashhish Vaidya, head of treasury at DBS Bank.

However, Vaidya remained optimistic about the long-term outlook, saying: "The India story is still intact. It is not getting derailed and hence, the rupee should remain well-managed and within a range of 83 to 84 against the dollar."

Dealers noted the rupee hit an intraday low of 83.65 before the Reserve Bank of India reportedly intervened, with public sector banks selling dollars to prop up the currency.

(KNN Bureau)