Rupee plunges to an all-time low at 57.33 per US dollar

The currency crash came after renewed concerns about the Eurozone crisis hit the risk assets. Broad gains in the dollar versus major currencies on the back of global risk aversion and weakness in domestic shares weighed on the rupee. Dollar buying from oil firms and gold importers added to the downward pressure, traders said. 

INR opened weak at 56.8 (it had ended at 56.30 on Thursday) to a dollar before falling to a record-low of 57.33 in the afternoon trade. Although it recovered marginally towards the end of trade, it closed at 57.12 to the dollar, down 1.47% from the previous close.

There was no significant intervention from India's central bank, the Reserve Bank of India (RBI). Forex traders said they expected RBI intervention following deep uncertainty about India's fiscal and economic outlook.

The INR traded at 89.01 to the pound (GBP) and 71.8 to the Euro.

In three months since its all-time low rate, the rupee has gained its lost ground amid more clarity about the global economic crisis, bailout packages for Euro-zone countries and stable Indian stock  markets.

In the first week of September, the rupee closed at 55.36 against the US dollar. It was the rupee's two-week high and came on the back of news that European Central Bank is planning to buy bonds leading to capital inflows.

On Friday, September 7, 2012, the rupee closed 0.54% higher than the previous day. It was the rupee's second day rise after it performed well the day before over the prospects of the ECB meeting. 

The rupee has also made gains against the GBP in September and stood at 88.5 at the close of the first week of September.  

But Indian market analysts expect some correction in the INR - USD ratio after the initial euphoria of the ECB move dies down and as it adjusts to the local economy and GDP growth news.