CAduniya.com : CA India Blog

NEW DELHI — The Indian rupee weakened to a record low against the dollar on Thursday, compounding the financial woes of a nation that should be a prime candidate to help pull the world out of its economic slump.

The currency has depreciated 26.5% against the dollar so far this year, closing in local trading Thursday at a 49.85 rupees. Analysts expect it soon to breach the psychologically important level of 50 rupees, possibly falling as far as 55 rupees, and not to recover measurably for up to six months.

Other currencies around the world in slower-growing, smaller economies have seen sharper declines against the dollar. And a weak rupee helps big Indian technology companies that export computer services.

MUMBAI: The Reserve Bank of India (RBI) has left all key rates unchanged in its mid-term monetary policy review announced today.

RBI has left the cash reserve ratio (CRR) at 6.5%, repo rate at 8%, and SLR at 25%.

It has lowered the FY09 growth forecast to 7.5-8%. In its statement, the RBI has mentioned that India is not immune to global developments, and that inflation still remains a concern.

The statement added the central bank may add liquidity if required, and would not shy away from curbing liquidity if recent steps seemed inflationary.

RBI said that the rapid credit growth is a cause for concern, and that credit growth needs to be moderate and continued correction. However, it also expressed fears that enhanced government borrowings in H2 may lead to further implications.