Mumbai, Thursday 20 November 2008: The Indian rupee opened at a record low of 50.50 per dollar on Thursday as a sharp fall in Asian share prices raised worries of foreigners cutting local equity holdings and repatriating the funds. Its previous record low was 50.29, which was hit in late October. It had closed at 50.02/03 on Wednesday.

On Wednesday, there was another reason for the precipitous drop an arbitrage opportunity between the domestic rate and the offshore rate for non-deliverable forwards.

The rupee had earlier breached the psychologically crucial level of Rs 50 per dollar on October 27, but later recovered during the day to close at 49.95 per dollar. Since January 1, the Indian currency has depreciated by 27% from Rs 39.42 per dollar.

The rupee started depreciating since May this year, when the FIIs accelerated their sell-off of Indian equities. According to RBI data, in the past six-and-a-half months, rupee has depreciated by 25% from Rs 40 per dollar to below Rs 50 per dollar. The depreciation gained momentum since September, 2008, after the financial blow-out in US and Europe. In the past two months, the Indian currency has lost 11% value - from Rs 45 to below Rs 50 per dollar.