Indian rupee crosses 40 barrier to the dollar

Indian rupee crosses 40 barrier to the dollar

BOMBAY (AFP): The Indian currency hit a record low here Wednesday, crashing through the psychological barrier of 40 rupees to the dollar for the first time.

Dealers said it closed at 40.90 against the greenback after crashing to 40. 15 half an hour into the day's trading.

The unit had plummeted to a close of 39.91 against the dollar on Tuesday, its previous record low.

The currency, despite active intervention by India's central bank, has fallen more than 12 percent since August, when it stood at 35.70.

Pradeep Sharma, at the foreign exchange and travel house Thomas Cook, said it would weaken further unless the central Reserve Bank of India "sold dollars heavily to support the currency."

He said there was a lot of demand from Indian importers for dollars.

Sharma added the currency had only strengthened because "people sold dollars to square their positions in line with the central bank rule that there should be no open positions at the end of the day.

"I expect the rupee to fall further on Thursday."

Analysts say turmoil in neighboring Asian markets and political uncertainty in India have led to the currency's weakness.