Bangalore: The battered rupee, which hit a record low against the dollar on Tuesday, has probably touched bottom and will rise modestly by the end of next year, a Reuters poll showed.

There is a growing expectation that Asian central banks - including the Reserve Bank of India (RBI) - will ease policy in the first half of 2012, stimulating growth in the second half and drawing nervous investors back.

That of course is dependent upon a solution to the euro zone crisis which has financial markets in its clutches and has triggered outflows from riskier developing markets, helping to underpin the United States (US) currency.

“We expect the global scenario to improve slightly," said Bhupesh Bameta at Quant Capital. “India still has growth differential with respect to Western countries so we expect to see more capital inflows."

Forecasts in the poll were in a wide range, outlining the uncertainty around the outlook for the rupee, which has plunged 18% against the dollar since the start of the year, making it Asia’s worst-performing currency.

Forecasts ranged from a low of 53 per dollar in a month to a rapid strengthening to 48. The range was not very different on the 12-month horizon, from 54.50 to 45 per dollar.

The economy grew 6.9%, its slowest pace in more than two years, in the quarter ending September thanks to stubbornly high inflation and 13 interest rate rises since early 2010.

Industrial output figures on Monday showed a shock 5.1% decline on a year ago, far worse than even the most pessimistic forecast in Reuters polls.

The government slashed its growth forecasts last week, with officials warning India was facing a serious balance of trade problem and will have a tough time meeting its fiscal deficit target.

But with inflation likely to cool, RBI is expected to cut rates by the middle of next year, as well as the cash reserve ratio.

Any expected rebound brought about by monetary easing could bring foreign investors back to India after a 20% fall in the benchmark stock index this year.

Stock market analysts polled by Reuters earlier this month expect the 30-share BSE index to rally 20% in 2012.

In the meantime, a lack of notable economic reforms, which has led to a perception of policy paralysis, has also taken some of the allure out of India for foreign investors.

The government last week suspended plans to open its $450 billion supermarket sector to foreign firms, backtracking from one of its boldest reforms in years in the face of a huge political backlash. That policy U-turn and the backlash that followed might make it more difficult for the government to pass other reforms, like allowing investors easier access to Indian markets.

“The rupee still needs to attract large capital inflows to bridge the deficit, or fall further," said Ramya Suryanarayanan, economist at DBS Bank in Singapore. “This, it would seem, ties the fate of the rupee to the pace of growth-enhancing structural reform ahead."