India's rupee hits new low against dollar, stocks slump

India's rupee hit a new low against the dollar on Thursday after the US Federal Reserve said it could start to reduce stimulus measures for the US economy. The rupee hit 59.93 in morning trade, well below its previous record low of 58.98 reached last week in part on growing concern about India's economic weakness. Indian shares also fell more than two percent on concerns of a slowdown in flows of overseas funds into emerging markets such as India. The rupee slid after Federal Reserve chairman Ben Bernanke said on Wednesday that the Fed could begin to ratchet down its key stimulus programme later this year, signalling a growing confidence in the US economy. The dollar has been strengthening against most Asian currencies but the rupee has been hard hit amid concerns about Asia's third largest economy, which has slowed sharply, as well as worsening public finances and political turmoil. "The verdict is clear, we are likely to enter a new territory (for the rupee)," said Abhishek Goenka, chairman of advisory firm India Forex.He feared the rupee would weaken further, to 61 levels in the near-term, and said intervention from India's central bank was unlikely. Analysts say the bank cannot intervene heavily to buttress the currency as it must retain enough foreign reserves for imports. It only has sufficient reserves for seven months of imports -- the lowest cover in 13 years. Officials confirmed last week that the Reserve Bank of India had intervened to halt the slide after it reached last week's record low. Traders said they believed the RBI sold dollars for rupees to lift the currency off its previous record low of 58.98 rupees to the greenback. The RBI has a policy of not commenting on movements in the foreign exchange market and of intervening only to curb volatility. The weaker currency makes imports costlier, especially of foreign oil on which India heavily relies, and will stoke already high consumer inflation. India is also already contending with a bloated current account deficit -- the broadest measure of trade.