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Falling for the fourth consecutive day, the Indian rupee tumbled to record low of 56.57 against the U.S. dollar on increased capital outflows from equity markets and rising demand from importers as the U.S. Fed indicated weak growth prospects for the American economy.
After a weak start at 56.40, the rupee dropped 42 paise to hit a new low of 56.57 per dollar at 1323 hrs — minutes after it had touched 56.55 for the first time — surpassing its previous record low of 56.52 on May 31. The rupee has lost 75 paise in the last three sessions.
The U.S. Federal Reserve launched new economic stimulus measures on Wednesday to tackle weak jobs growth and predicted a slower output expansion, amid the continuing debt crisis in Europe, especially in some eurozone nations.
Forex traders said they were on watch for any potential intervention from the Reserve Bank of India to defend the rupee.
On Monday, the RBI dampened market sentiment by keeping interest rates unchanged the mid-quarterly monetary policy review. The same day, global rating agency Fitch cut the country's outlook to "negative," becoming the second credit agency after Standard and Poor's to threaten India's investment grade rating.