MUMBAI May 8 The Indian rupee fell on Tuesday
on worries foreign investors would not be swayed by the
government's move to address their concerns over taxation,
sparking a tumble in domestic stocks and fears of continued
The falls in the afternoon session prompted the Reserve Bank
of India to step in when the rupee weakened to 53.30 against the
dollar, according to four dealers, continuing a series of
interventions since last week.
The rupee erased the gains on Monday when the government
announced it would postpone controversial tax rules for foreign
investors and would shift the onus of proving evasion on tax
Despite the moves, foreign investors sold a net of 10.3
billion Indian rupees ($194.69 million) in domestic stocks on
Monday and Tuesday, according to provisional data from the
National Stock Exchange.
"The initial euphoria about the GAAR is done. The market is
now looking at actual flows," said Uday Bhatt, senior manager of
dealing with state-run UCO Bank.
The rupee fell 0.4 percent against the dollar to
53.12/13, weakening from its Monday close of 52.9050/9150.
The rupee is fast approaching a record low of around 54.30
to the dollar, weighed down by worries about India's fiscal and
economic challenges, and increasingly, that foreign investors
will exit from the country.
Reserve Bank of India deputy governor Subir Gokarn said on
Tuesday a widening current account deficit and a negative
balance of payments are still worries for the central bank.
"We acknowledge that India is currently running a large
current account deficit that requires capital flows to fund.
Therefore, the global risk environment is critical to its
performance," Nomura said in a note on Tuesday.
The one-month offshore non-deliverable forward contracts
were at 53.45.
In the currency futures market, the most-traded
near-month dollar-rupee contracts on the National Stock
Exchange, the MCX-SX and the United Stock Exchange all ended
around 53.38 on a total volume of $5.23 billion.
($1 = 52.9050 Indian rupees)
(Editing by Rafael Nam)