Wednesday, August 28, 2013

Indian rupee hits record low as confidence in government falters...

India's rupee hit a record low and posted its biggest percentage fall in 18 years on Tuesday as parliament's approval of a $20 billion plan to provide cheap grain to the poor renewed doubts about government resolve to control spending ahead of elections due next year.

The alarm over India's fiscal deficit eclipsed an announcement by Finance Minister P. Chidambaram that the government had approved infrastructure projects worth 1.83 trillion rupees ($28.4 billion), a step aimed at reviving economic growth and shoring up investor confidence.

Instead, the rupee plumbed new depths while shares plunged after Chidambaram spoke due to investor anxiety about a country also facing other challenges, including a record current account deficit and the weakest economic growth in a decade.

Despite measures to address these concerns, including a slew of steps to attract dollar inflows and curb gold imports, Indian policymakers are struggling to instill confidence and end the climate of fear that traders say is gripping currency markets. Full story...

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