Bombay: The Indian Rupee slipped to a record low against the Dollar on Monday, with analysts predicting a further slide as importers book forward and local supplies of the US currency dry up.

The Rupee closed on Monday at Rs 47.02 to the Dollar, but Finance Minister Yashwant Sinha insisted that the trend had to be seen in a wider context where East Asian currencies had depreciated against the greenback.

“There is no undue volatility in the Rupee value. The fall must be seen in the global context,” Sinha told reporters.

Treasury Head at the Private Indusind Bank Shahrukh Wadia, predicted that the Rupee would fall to Rs 47.50 next month.

“In the last three or four working days, the Rupee has fallen about 45 paise (one US cent). Ten days back the Reserve Bank of India (RBI) indicated that the Rupee was overvalued,” Wadia told reporters.

About three-quarters of India's foreign trade is denominated in US currency while the rest is in other convertible currencies.

India's foreign currency reserves are currently at $ 42.7 billion, the highest since the country began economic reforms in 1991.

However, the stock markets have taken a beating from the impact of the US economic slowdown and a domestic scam affecting the banking sector and the stock markets.

“Foreign portfolio investors are unlikely to put in any more significant amounts of money as they see the markets as ebbing. Not many people want to get in now,” Wadia said.

The Bombay Stock Exchange sensitive index was down almost 11 per cent last week over the week before.

N Subramaniam, at Mecklai Financial Services, agreed that the Rupee would fall to Rs 47.50 in the next two or three weeks.

“The RBI has been buying up Dollars and preventing the Rupee from appreciating, even though portfolio inflows have been coming in.”

Subramaniam said that the rise of the Dollar against other currencies was another reason for the market betting on a weaker Rupee. “The Yen has fallen about eight per cent so far against the US Dollar, while the Singapore Dollar has fallen about five per cent. The RBI itself wants a steady depreciation of the Rupee so that exporters do not get hurt.”

During the past decade the Rupee has depreciated between five and seven per cent annually against the Dollar. The Indian currency is only partially convertible.

AFP

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