Indian rupee falls to record low, more losses seen
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PublishDate:
2009-03-02 16:16:00
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MUMBAI, March 2 (Reuters) - The Indian rupee dropped to record lows on Monday as weak Asian stock markets heightened fears of capital outflows and analysts said it was likely to weaken more in the near term.
At 10:23 a.m. (0453 GMT), the partially convertible rupee was at 51.67/68, 1.1 percent down from Friday's close of 51.10/12.
The rupee traded as low as 52 per dollar according to Reuters data, although dealers said it was likely to have been a mishit that could be reversed with the counterparty later in the day. They said without that trade, the low was around 51.8 per dollar, which would still be a record low.
The rupee shed 2.7 percent last week, its worst performance since the week to Nov. 14 when it fell 2.8 percent. Dealers said a number of factors had hit the rupee, including worsening economic data, falling stocks, importers buying dollars in anticipation of further weakness, and arbitrage plays between the onshore spot market and offshore derivative markets.
Traders said exporters were cancelling orders set when the rupee was much stronger, adding to demand for dollars, and firms which had foreign currency liabilities were also seeking dollars. J. Moses Harding, head of global markets at IndusInd Bank, expects the rupee to strike 53 per dollar in the near term.
India's main stock index .BSESN has fallen nearly 10 percent in 2009, with foreign fund withdrawing about $1.7 billion.
The outflows have been a key driver for the rupee. In 2008, the rupee fell 19.1 percent on the back of net sales of more than $13 billion of stocks by foreign funds.