Indian Rupee On Its Way to 69

The Indian rupee has dropped by nearly 4% to a new low of 68.7 to the US dollar amid growing concerns over the health of the country’s economy.

The decline comes a day after India approved infrastructure projects worth $28.4bn (£17.7bn) to try to revive the economy and prop up its currency.

The rupee has lost 20% of its value this year and is one of the world’s worst-performing currencies.

It has also been hit by fears that the US will scale back stimulus measures.

The US central bank has sought to increase liquidity in the US economy, through its policy of quantitative easing, in an attempt to boost growth.

A part of that liquidity has flowed into Asian markets, such as India, and lifted stock and asset prices.

However, the Federal Reserve has said it will scale back the programme if the US economy improves, with some analysts expecting this “tapering” to begin as soon as next month.

That has seen investors pull money out of emerging markets, hurting currencies and stocks in those countries.

via BBC

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