The rupee slid further to close at a low of 54.90 against the dollar as growth worries in Asia’s third largest economy gripped investors.
This and the uncertainty over taxation on foreign institutional investments in the budget saw overseas investors pulling out their money thereby exerting pressure on the Indian unit.
The Indian unit opened 29 paise weaker at 54.65 (previous close: 54.36), a day after the Finance Minister, P.Chidambaram, presented a budget that failed to assuage market sentiments.
Currency markets were also hurt by the gross domestic product data for the third quarter. The country’s GDP growth came in at a miserly 4.5 per cent in the October to December period. In the first three quarters of the current fiscal, the growth rate has slumped to an average of 5.1 per cent.
The Indian unit had closed almost 50 paise weaker at 54.36 on Thursday.
In addition to weak growth numbers, yawning fiscal and current account deficit has put pressure on the Indian unit.
“The Budget will go a long way in addressing the twin deficits,” Urjit Patel, Deputy Governor, Reserve Bank of India, said on Thursday.
If this happens the rupee will show some sustainable signs of appreciation, market participants believe.
Call rates, G-Secs
The interbank call money rates closed lower at 7.50 per cent from their previous close of 7.90 per cent.
The 8.15 per cent government security, which matures in 2022, closed lower at Rs 101.55 from previous close of Rs 101.80. Yields rose to close at 7.91 per cent against 7.87 per cent on Thursday.