NEW DELHI, June 10 (UPI) -- The Indian rupee, sliding since May, fell to a record low against the U.S. dollar on concerns about what an official called a "large current account deficit."
Just before closing Monday, the dollar traded as high as 57.95 rupees and the Indian government sought to calm fears. The rupee also has been affected by the rising dollar.
Some analysts did not rule out further weakening of the Indian currency. The rupee had closed at 57.06 on Friday. Its previous record low was 57.33 to the dollar set in June 2012.
Arvind Mayaram, economic affairs secretary in the Indian Finance Ministry, told reporters in New Delhi there was an "unwarranted" panic in the market, the Press Trust of India news agency reported.
Mayaram said he expects things to settle down.
"We are watching the situation closely," he said.
Raguraman Rajan, the Indian government's chief economic adviser, said the rupee weakening could be a temporary phenomenon.
"India has large current account deficit and currencies of emerging markets [with)] large CAD have depreciated more," he said. "This could be temporary phenomenon."
He didn't say where the government would want the currency to settle.
The dollar strengthened further last week on strong U.S. economic data.
The Wall Street Journal said considering the new numbers investors feel the U.S. Federal Reserve may slow its monetary stimulus earlier than later. The report quoted traders as saying investors had withdrawn more than $2 billion from Indian bonds in the past two weeks.
"Given the current-account-deficit situation, we expect the rupee to remain under pressure, at least for the next three months," Mahendra Kumar Jajoo, chief investment officer at Pramerica Asset Managers in Mumbai, told the Journal.
The Association of Chambers of Commerce and Industry of India urged the Reserve Bank of India, the country's central bank, to intervene and check the rupee slide, saying a weak currency along with outflows of foreign institutional investors from the Indian debt market could have an impact on the Indian economy, the Times of India reported.