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Rupee closes at record low of 50.48 as slump deepens

Rupee closes at record low of 50.48 as slump deepens
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First Published: Fri, Feb 27 2009. 12 36 AM IST

Updated: Fri, Feb 27 2009. 12 36 AM IST
Mumbai: The rupee fell to a record closing low versus the dollar as a deepening global economic slump damped demand for India’s assets and exports.
The currency weakened for a fourth day as stock exchange data showed overseas investors increased stock sales after Standard and Poor’s cut India’s credit rating outlook to negative from stable on Tuesday.
Also See Rising Pressure (Graphic)
Exports shrank an average 7.7% a month last quarter and imports grew 8.5%, fuelling concern the current-account deficit will widen from a record.
“Pressure remains on the rupee to fall, due to emerging-market risk aversion and a deteriorating global macroeconomic environment,” said Sailesh K. Jha, Singapore-based senior regional economist at Barclays Capital. “We expect a much more pronounced decline in services exports from India as the global slump deepens.”
The rupee fell 1.1% to 50.4825 per dollar at close in Mumbai, ‘Bloomberg’ data shows. It touched a record intraday low of 50.615 on 2 December. The currency will reach 52 by the end of March, Jha said.
Overseas funds sold $1.5 billion more Indian equities than they bought this year, adding to 2008’s 13.3 billion in net sales, data by the Securities and Exchange Board of India (Sebi) shows.
Trade minister Kamal Nath said on Thursday that exports in fiscal 2009 may reach $175 billion, short of the targeted $200 billion.
Sales abroad may rise to $200 billion in fiscal 2010, he said. The rupee’s losses were limited by speculation the Reserve Bank of India, or RBI, sold dollars from its reserves to limit rupee volatility.
The rupee also fell on speculation companies increased dollar purchases to settle import bills before the month ends.
Offshore forward contracts show traders increased bets for further weakness in the rupee.
Graphics by Ahmed Raza Khan / Mint
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First Published: Fri, Feb 27 2009. 12 36 AM IST
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