Rupee falls to 8.5-month low on global dollar strength

The Indian rupee fell below the key psychological mark of 56 to the dollar on Thursday. This is the lowest level in over 8 and half months on worries about a potentially early end to US bond buying programme.

The rupee fell to as low as 56.01, its lowest since September 6, 2012. At 12.22 pm, it was at 55.88 to the dollar versus its previous close of 55.46.

Technical analyst Jai Bala of cashthechaos.com says the market was throwing contradictory signals a few weeks ago, with the Indian currency poised to test its all-time low.

In the extreme short-term, the dollar index is looking overbought. However, Bala believes the index will go much higher than what people are anticipating in the next three-four month’s time frame. “I have a price projection of about 88-90 in the medium to long-term,” he told CNBC-TV18.