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    Dec 2009


    Default Eurozone crisis drags rupee, Sensex down

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    The rupee touched its all-time low at 54.51 against the U.S. dollar while equities continued their downward spiral recording a four-month low with a fall of 298.6 points or 1.83 per cent on the Bombay Stock Exchange.

    The rupee closed at 54.49/50 against its Tuesday's close of 53.79. The rupee's previous historical low was recorded in mid-December 2011 at 54.30 on eurozone debt crisis.

    The issue is looming large again as the European nations are scrambling to resolve debt issues of their member-nation, Greece, which is gearing up to face another election to end a stalemate. The fall was aided by domestic fiscal concerns, which brought down sentiment drastically in the financial markets.

    The equity markets, too, faced a grim situation, on Wednesday, and the 30-share BSE sensitive index (Sensex) closed at 16030.09, a fall of 298.6 points or 1.83 per cent. It fell to 15974.60 intra-day, its lowest level in four months. However, bargain-hunting saved the market from closing below the psychological 16000-mark.

    “The market will continue to remain bearish if rupee falls further. It all depends on how the Reserve Bank of India tides the rupee movement,” said Kishor P. Ostwal, CMD, CNI Research Ltd. “As of now, it seems the speculators have full control over the currency market,” said Mr. Ostwal adding, they might succeed in taking rupee to 55-56.” If the rupee bounces back, equity markets will bounce back very sharply. Possibly, “we can again see a dead cat bounce tomorrow [Thursday].”
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