The Rupee Crashes and tumbles to Rs64/$. Worse days Ahead?

The rupee fell to its lowest in 20 months on Thursday, weighed down by concerns over the government's taxation policies that threaten to reduce the allure of local assets for foreign institutions, while a global debt sell-off also hurt.

Traders said the uptick in non-deliverable forwards traded in Singapore was hitting sentiment for the local unit and prompting custodian banks to sell the rupee.

The one-month NDF was at 64.35/35 versus Wednesday's close of 64.02. The partially convertible rupee was trading at 63.91/92 per dollar by 0602 GMT, after hitting 63.93, its lowest since Sept. 13, 2013. The pair had closed at 63.54/55 on Wednesday.

Most emerging Asian currencies lost ground on Thursday as a global bond rout lifted government bond yields across the region.
Traders are now waiting to see if the central bank steps in to prevent a further sharp fall in the currency.

According to experts, the rupee might have depreciated against the US dollar, but it has been a more stable currency within emerging markets. In the worst case scenario, the Indian unit may slip to 65 per dollar, but traders would then eye the RBI to stem the fall.