Re breaches 56/$ level; FM dials RBI governor

Currency plunges to a fresh low of 56.22 but closes at 56

On a day the rupee plunged further to touch 56 to a US dollar,Finance Minister Pranab Mukherjee discussed the situation with Reserve Bank of India Governor D Subbarao via videoconference. Sources said that it has been decided that any action in the form of an intervention in the currency market to support the rupee would be taken solely by the central bank.

However,the RBIs attempts during the day to prop up the rupee,which plummeted to 56.2250 before closing at 56 against the dollar,did not have much impact at a time when appetite for risky assets is ebbing around the world on renewed Greece concerns. The fall marked the sixth consecutive trading day that the currency has hit a record low.

The RBI sold $100-$250 million in its first intervention in three sessions on Wednesday,but the amount was too small to stem the rupees fall,dealers said. The currency has already dropped more than 13 per cent from its 2012 peak in February. In fact,the rupee is the only major currency that has fallen against the euro.

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Meanwhile,joining a global sell-off,the Sensex plunged below the 16,000 level. The 30-share index dropped further to a days low of 15,847.03 before closed at 15,948.10,a loss of 78.31 points from its last close.

Euro bonds,debt to dominate EU summit

European leaders will try to breathe life into their stricken economies at a summit over dinner on Wednesday,but disagreement over the issue of euro zone bonds and whether they can alleviate two years of debt turmoil will dominate the gathering. For the first time in more than two years of debt-crisis meetings,the leaders of France and Germany have not held their own mini-summit beforehand to agree positions,marking a significant shift in the traditional axis.

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