India\'s rupee hits new low, stocks tumble further

India\'s currency plunged to a new low and shares tumbled another two percent on Monday even as the World Bank\'s chief economist said the country\'s economic problems were \"overplayed\". Kaushik Basu said India was not in danger of a full-blown economic crisis, despite mounting fears about Asia\'s third largest economy, which is struggling with a gaping current account deficit that has helped push the rupee to record lows. \"Growth may not have bottomed out. We have further to go (down), but the situation is not as bad as is being captured by the mood and captured in the headlines,\" Basu told an audience in New Delhi. Basu, who was an adviser in the Indian finance ministry until September, said the situation was different from 1991 when India had to seek a bailout from the International Monetary Fund in what was considered a national humiliation. \"India is nowhere near the 1991 crisis. The gloom is being overplayed,\" he added. The partially convertible rupee, now Asia\'s worst-performing major currency this year, fell to 62.70 to the dollar, past its previous low of 62.03 on August 16, on concerns about the slowing economy. Indian shares, which fell nearly four percent on Friday, plunged another 2.11 percent or 392.86 points to 18,205.32 points in afternoon trade. Nervousness rose over the currency as foreign investors pulled out cash. Yields on benchmark 10-year government bonds jumped to over 9 percent -- their highest since November 2011 -- with a higher rate indicating a lack of willingness to invest in the paper. Dealers said they feared the rupee could weaken further on concerns that a series of central bank measures over the past three months would not help it. At Monday\'s new low, the rupee has fallen over 14 percent against the dollar this year, outstripping the yen in its tumble. Investors awaited fresh measures from the Reserve Bank of India (RBI) and the government to aid the rupee on Monday, but there was no intervention by early afternoon. \"The market is so panicked that 63 is a possibility,\" said Param Sarma, chief executive with consultancy firm NSP Forex, referring to the rupee\'s level. Sarma said he expected the RBI to intervene in the forex markets to prop up the currency, but it would not help much. \"There is no respite for the rupee,\" he said. Last Wednesday, in the latest of a series of measures to prop up the currency, the RBI spooked investors when it tightened controls on the amount of money Indian firms and individuals can send abroad. The move has been criticised as a disturbing throwback to the days before India unleashed its economic liberalisation drive in the early 1990s, when Indians\' access to foreign exchange was strictly limited. In the past few weeks policymakers have raised short-term interest rates, announced plans to let state firms raise foreign funds abroad, and curbed gold imports in a bid to narrow the deficit and stabilise the rupee. Emerging-market currencies have been hit by the prospect that the United States will roll back massive stimulus measures. These have been responsible for huge inflows of foreign investment into developing countries. India relies on foreign capital to fund its current account deficit. Since June 1, overseas funds have pulled out $11.58 billion from India\'s stock and debt markets. Sonam Udasi of IDBI Capital Markets said: \"For all investors, growth remains the most critical issue. Until that gets back on track, the nervousness will remain.\" India\'s growth slackened sharply to a decade-low of 5.0 percent in the year to March amid a sharp slowdown in industrial activity. The Congress-led government has been desperate to revive the economy, fearing a voter backlash in elections due by next year.