The Indian rupee has recorded a drop to 44.55/56 per dollar on Wednesday following a 1 percent fall in the stock market in the country.
The currency had closed at 44.4350/4450 on Tuesday. The fall in the stock market was as much as 1.2 percent on Wednesday following other stock markets around the world which took a beating due to the downgrading of the credit rating of Greece and Portugal.
The index of the USD against the basket of six major currencies largely remained unchanged. The Euro fell to year low against the dollar on Wednesday. Analysts say that the indications from the downgrading of credit rating are that the debt problems of the Euro zone may spread.
The drop in the rupee is mainly attributed to the stock market fall and the effects of Euro devaluation. The shares in the country, BSESN fell 1.2 percent. Foreign investments in local stock markets usually push up the value of the Rupee. The foreign funds invested about $6.3 billion in the stock market in India so far this year.
Analysts expect the Rupee to be in the range of 44.65-75 due to the trends that might result in a strengthening dollar against the basket of currencies. Even as the index of baskets of major currencies remained largely unchanged most Asian currencies fell against the dollar.
The benchmark index of the Bombay Stock Exchange, Sensex fell 1.29 percent to 17,461.35 points in the early trading today.