The rupee hit record low of 58.15 against the US Dollar on Monday highlighting that the Indian economy’s woes are far from over. The rupee plummeted coming at the back of expectations that the US Federal Reserve would withdraw its bond-buying program as well as domestic concerns such as widening trade gap, high fiscal deficit and surging gold imports. Market watchers remain bearish on the Indian currency and expect the rupee to depreciate further before settling at 58-60 in the coming days.
The weakening rupee also poses an uphill task for the government that has been keen to bring the sluggish economy back on track. India’s economic growth touched a 10 year-low of 5 per cent in 2012-’13. A weak rupee also throws a spanner in the government’s plan to boost foreign inflows as well as improve India’s sovereign rating. It also increases expectations of a further interest rate cut by RBI when it meets on June 17.