Currency caught up in steady slide

India Dispatch: The Indian rupee has been dubbed the worst-performing currency in Asia this year.

The Indian rupee has been dubbed the worst-performing currency in Asia this year.

And rightly so. The currency has lost 17 per cent of its value since January, slumping to record lows last month and this month.

The latest low was recorded on Monday, with the currency declining to 52.835 against the dollar and further falls expected.

The country's rising inflation, high interest rates, huge fiscal deficit and Europe's financial woes have all contributed to the recent falls.

Economists say the rupee took a further hit from a decline in industrial production for the first time in more than two years.

The Indian government is worried. Pranab Mukherjee, the finance minister, told a parliamentary session last week the weak rupee would raise the cost of oil imports and may create a risk to the country's fiscal deficit target of 4.6 per cent of GDP.

The government said the falling rupee would put pressure on the budget, increase the cost of servicing foreign debt and cause further inflation.

* Pia Heikkila