statesman news service
MUMBAI, 20 JUNE: The US Federal Reserve chairman Mr Ben Bernanke’s policy decision to slow down the current $86 billion-a-month bond purchase programme over the next few months and bring it to a complete halt by mid 2014 sent panic waves across the global currency and share markets today.
The stock crash in Mumbai was more pronounced and steep after trading resumed on European stock markets. The 30-share Sensitive Index of BSE opened with a negative gap of 176.50 points. The 50-share Nifty at start was 68.11 points down. The rupee resumed with a loss of one rupee at 59.70 against yesterday’s 58.72.
The Sensex closed at 18,719.29 (below 19K mark) down 2.74 per cent or 526.41 points. The Nifty was 2.86 per cent or 166.35 points down at 5,655.90. In Sensex two shares advanced and 28 declined. The ratio on NSE was 2:48. The Sensex suffered second steepest crash since 27 February 2012.
Foreign investors scurried to withdraw from emerging markets fearing drying up of dollar liquidity in the international financial system. The domestic markets being most vulnerable to outflow of foreign funds the partially convertible rupee and benchmark indices of Bombay and National Stock Exchanges suffered worst losses in many months.
The rupee hit a record all-time low in the intra-day trade when it momentarily hit 59.98-mark against the US dollar which was a loss of 130 paise. Some dollar selling by state run banks at the behest of the Reserve Bank of India saved it from spilling over 60 per dollar as it ended the day 59.57a dollar down 1.47 per cent or 87 paise against yesterday’s 58.72 a dollar.
The unit has depreciated more than 10 per cent since the start of May. Dealers do not rule out further fall on account of month-end demand for dollars from oil companies and banks. As dollar supply shrinks the demand will go up proportionately, they claim. 
It was a global meltdown but the domestic shares and currency unit stood out for worst performance. A series of statements by finance ministry officials including chief economic adviser Mr Raghuram Rajan trying to underplay the panic in the currency market failed to restore confidence among investors on Dalal Street.
Meanwhile, gold today fell to the lowest level in more than 2-1/2 years after Mr Ben S Bernanke said asset purchases may be reduced later this year as the US economy recovers.