India gripped by mood of crisis as rupee falls again

The Indian rupee fell to a new low against the dollar on Wednesday and stocks declined after a central bank promise to inject liquidity into the country’s financial markets provided only temporary relief from a deepening sense of crisis.

Bank shares and bond prices had jumped in the morning after the Reserve Bank of India’s latest intervention, but the euphoria quickly evaporated.

At one point the rupee was down over 2 per cent and hit a record low of Rs 64.55 to the dollar amid investor scepticism about the policies of the RBI and the Indian government. The Sensex stock index fell nearly 2 per cent to close at 17,905.91, the lowest in nearly a year.