Mumbai: The rupee closed below the 64-level for the first time on Wednesday with the currency ending the day at 64.04, 81 paise below its previous close of Rs 63.23 against the dollar. The British pound also created a new record closing above the 100 mark at 100.42 as against 99.03 on Tuesday. With most bankers feeling that the 65-level may be taken anytime now, economists are now talking about the rupee touching 70. On Wednesday, Deutsche Bank said that the rupee could fall to 70 in around a month's time. On Tuesday, UBS had forecast the 70 level for the rupee this year.
The rupee fell to an intraday low of Rs 64.54 as the dollar strengthened ahead of the release of minutes of the US Federal Reserves July meeting. If the meeting reveals that a US recovery is seen to be underway by Fed committee members the rupee may fall further on expectation that the Fed may start to withdraw its monetary stimulus.
Dealers said that markets were confused over RBI measures to bring downlong-term rates through buyback of bonds even as it sought to keep rates high at the shorter end.
"The RBI took steps on Tuesday to contain longterm yields and ensure that credit flows were not unduly disrupted by the recent currency stabilization measures. Juggling currency and growth concerns at the same time is not easy and if not done carefully it risks sending mixed messages about policy intentions. That would neither help the currency or growth," said Leif Lybecker Esksen, chief economist for India & ASEAN, HSBC Global Research.
The day started on a positive note for the equity markets as bonds staged the best recovery in four years with yields falling by 50 basis points. However, the fall in the rupee spread panic in equity markets with indices closing lower.