Mumbai: The rupee hit another record low on Wednesday as worse-than-expected inflation data and the US Fed's decision to refrain from new economy-boosting measures heightened concerns that capital outflows from riskier economies could accelerate.
At 12:40 pm, the rupee was at 53.62/63 to the dollar, after hitting an all-time low of 53.75, taking the drop since its July high to 18.4 percent.
"The bearish sentiment is very strong and there is nothing going for the rupee," said Hari Chandramgathan, a foreign exchange dealer with Federal Bank.
India's wholesale prices rose 9.11 percent in November, leaving inflation stubbornly high and suggesting the central bank would hold rates steady at its review on Friday even as worries grow over the health of the economy.
Sailesh K Jha, head of Asia strategy at Skandinaviska Enskilda Banken, said the rupee was vulnerable because of large external debt payments of about $20 billion due in the first half of 2012 and because importers were not effectively hedged.
"We anticipate continued net outflows from the equity market into first half of 2012 as the uncertainty on the outlook for India growth, inflation and macroeconomic policies lingers," Singapore-based Jha said.
The rupee, Asia's worst performing currency this year, could slip to 55 to the dollar by the end of December and head to 57 in the first quarter of 2012, he said.
The low probability of strong intervention by the Reserve Bank, given the limited firepower in its currency reserves, is likely to keep the rupee under pressure, traders said.
However, the currency will probably rise modestly by the end of next year, a Reuters poll showed.
One-month offshore non-deliverable forward contracts were quoted at 53.62.
The one-month onshore forward dollar premium was at 32.25 points, down from 33 on Tuesday.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX, and the United Stock Exchange were around 53.8 above the spot rate.
The BSE Sensex was up 0.16 percent, in choppy trade as the inflation data dampened hopes of any immediate monetary policy easing.
While the central bank is widely expected to keep rates on hold at its review on Friday, economists expect it to accelerate monetary easing in 2012 as economic conditions worsen in Asia's third-largest economy.####Rupee vs Dollar: 1990 to present
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