Mumbai: India's rupee crashed nearly four per cent to a new record low yesterday as worries about a United States-led military strike against Syria fanned fears of a financial crisis.
The rupee, which lost three per cent against the dollar on Tuesday, plunged another 3.86 per cent to close at Rs68.80 to the US unit, its biggest one-day fall in nearly two decades. The Finance Ministry called the sharp fall 'irrational'.
"This is an irrational sentiment. It (the rupee) will correct itself. It is important to stay on the course. There is no need to panic," economic affairs secretary Arvind Mayaram told reporters in New Delhi.
The rupee, Asia's worst-performing currency this year, has lost around a fifth of its value against the dollar since the start of 2013. Analysts fear the sharp rise in global crude oil prices will worsen energy-import dependent India's already record current account deficit ó the broadest measure of trade.
Investors have voiced worries that India could be headed for its worst balance of payments crisis since it pawned its gold in 1991 to cover its import bill. But Mayaram said the current account deficit in financial year 2013-14 "will be much lower than expected. We have already seen some moderation."
The deficit hit a record $88 billion last year but the government has said it will cut it to $70 billion this year. But with expectations mounting of military action against Syria, "the flight to dollar safety is expected to intensify pressure on the rupee," DFC analyst Ashutosh Raina warned.