Pain in Spain drags India Re to new low of 56.23

Currency Loses Over Re 1 In 2 Sessions Mumbai:The rupee breached the 56-level once again to end the day at 56.23 — its lowest close and near its all-time intraday low of 56.38 seen last week. The rupee weakened against the dollar which gained in the international market after trouble in Spain's banks pulled the euro down to atwo-year low.      "Intervention by the Reserve Bank of India prevented the rupee from sinking to a new low against the dollar. Although the domestic currency had come close to its previous low, which is seen as a resistance level, there was no major supply and import demand persisted," said a dealer with a private bank. The rupee, which closed at 55.68 on Tuesday, opened weaker and quickly slipped past the 56-mark to trade around 56.20. Dollar sales by the central bank helped pull back the currency to 56.14 levels, however, fresh bad news from Europe dragged the rupee down to close at its low of 56.23.      Following Wednesday's decline, the rupee has lost more than one rupee in the last two trading sessions and continues to be the worst performing Asian currency although the Indonesian Rupiah and the Malaysian Ringitt also weakened against the dollar.      This week saw some positive developments in Greece where surveys showed that elections may throw up a probailout party. owever, Spain is now turning out to be a bigger worry than Greece. On Wednesday, the Spanish government said that it would infuse 19 billion euros into distressed real estate lender Bankia SA whose troubles had led to a run on Spanish institutions. Also the Bank of Spain warned that the country may sink deeper into a recession. Dealers are worried about Spain because it is a much larger economy and may prove more difficult to bail out by the larger economies of northern Europe.      According to David Joy, chief market strategist, Ameriprise Financial, the present global situation reflects the triumph of fear over valuation. "In Brazil, the Bovespaindex is trading at 9.4x expected 2012 earnings. The S&P 500 is trading at 12.7x. In Europe, the Euro Stoxx 50 index is trading at a 8.9x P/E ratio. Each of these represents a meaningful discount to their long-term averages, but these are not average times. Three full years into the economic recovery, investors' first reaction remains to flee, not to fight," he said in a note.  BROKEN BY BANKIA  tIndian currency weakened due to the euro plunging to a two-year low on bank trouble in Spain, which is turning out to be a bigger worry than Greece  tSpanish govt will infuse 19bn euros into distressed Bankia  tDealers are worried as Spain is a much larger economy and difficult to bail out  tIn the domestic forex market, RBI intervened with dollar sales that prevented the rupee from sinking to another intra-day low tThe slide has ensured rupee's status as the worst  performing Asian currency