Rupee slides to 6-month low of 65.1 on panic dollar buying

The rupee on Monday suffered a yet another blow to plunge by a whopping 31 paise at a fresh six-month low of 65.1 a dollar after heavy buying of the dollar and concerns on the macroeconomic front.

This was the weakest closing for the home currency since March 24, when it had ended at 65.41.

Fears over fund outflows from domestic capital market led to weakened forex market sentiment against the backdrop of imminent Fed rate hike and unwinding of its stimulus measures amid unsupportive global factors.

The Fed reaffirmed its intention to hike rates in December and normalising its crisis-era stimulus programme into reverse from next month last week and since then the dollar has been under pressure. Hardening speculation of widening fiscal deficit after the government indicated a stimulus package meant to jump- start the nation's ailing economy put trading mood into further disarray.

The GDP expansion hit a threeyear low of 5.7 per cent in the April-June quarter with India losing the fastest-growing economy tag to China for the second straight quarter.

Besides falling GDP growth rate, exports are facing strong headwinds and the industrial expansion hit the lowest in five years. There is an increased speculation over a possible fiscal stimulus which can go above ~40,000 crore after six successive quarters of dip in the economic growth.

Foreign investors and funds remained in exit mode as they have pulled out nearly ~5,500 crore from local equities so far this month due to geopolitical concerns and a tendency to take profit.