Rupee Falls to Record Low of Rs 51.80 Vs. Dollar

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Mar. 2 – The Indian rupee hit a record low nose-diving to almost Rs 52 against the dollar on Monday due to rising foreign fund outflows. The Indian rupee which has depreciated significantly over the last few months shed 2.7 percent last week and 4.7 percent in 2009. India’s currency fell 19.1 percent in 2008 as foreign fund outflows reached US$13 billion. The rupee is expected to remain low at approximately Rs 52 to the dollar during the next few months.

FDI inflows into India more than halved in the third quarter of this fiscal ending December to US$3.94 billion compared with US$10.07 billion in the quarter ended June 30, Junior Commerce and Industry Minister Ashwani Kumar told the Wall Street Journal.

“There’s a lot of pressure on the rupee as portfolio investments are falling amid the worsening global equity prospects,” Sanjay Arya, Mumbai-based treasurer at state- owned Bank of Maharashtra told Bloomberg. “A rating downgrade by S&P is feared. In addition, the outlook for exports looks quite bleak.”

Manufacturing activity in India also remained low for the fourth straight month as the global downturn hurt business sentiments. The ABN AMRO Bank purchasing managers index (PMI), based on a survey of 500 companies, rose to a seasonally adjusted 47.0 in February from January’s 46.7.