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.