This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

No End in Sight for Sell-off in Indian Rupee

NEW YORK ( TheStreet) -- Earlier in the month I suggested the Indian rupee was positioned for continued weakness. This has turned out to be the case, as the rupee continues to be one of the world's worst performing currencies -- hitting new record lows after declines of more than 17% for the year. The reasons for this have come from two central areas: market uncertainty generated by potential Syrian military conflicts has led to surging oil prices, and India's unmanageable current account deficit has discouraged investors from adding exposure in the country's assets.

The weakness has extended to India's stock and bond markets as well, and the situation is starting to more closely resemble the balance of payments crisis the country experienced in 1991 when India was forced to use gold as a collateral payment for covering import costs. India imports roughly 80% of its oil, and this month's 8.9% increase in Brent crude prices will only add to current account problems that have undermined prospects for the rupee all year.

In the first seven months of 2013, India imported oil at an average rate of $14.2 billion (a slight increase from the $13.9 billion in the previous year.) The government now plans to enact measures to reduce oil imports, but this is easier said than done and broader growth prospects are starting to look bleak. GDP figures for the second quarter are now expected to show an increase of 4.6%, and will likely drop below 4% for the year. If these estimates are accurate, capital flight and external deficits have created a scenario where India is expanding at its weakest pace since the 1991 crisis.

As a result, the rupee has seen some of its worst intraday declines in two decades, and the currency is now set on a clear path to fall below 70 against the U.S. dollar. The USD/INR forex pair has fallen by more than 13% this quarter but there is little to suggest that the declines have reached a bottom. In bond markets, yields for the benchmark 10-year note have surged to less than 9%, after seeing single-session gains of more than 50 basis points. In stocks, the SENSEX continues to trade under pressure, losing 7.4% on the year and falling to its lowest levels since September.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs