Indian Rupee falls to 13-month low against dollar

The rupee fell to the lowest level since April 2007 on speculation that record crude oil prices will widen the nation's trade and current account deficits, increasing demand for foreign currencies. The rupee declined for a third day as local refiners increased dollar purchases to pay for imports of crude oil, which reached an all-time high of $126.98 a barrel in New York yesterday. The currency also weakened after data from India's capital markets regulator showed overseas investors added to sales of local equities.

The rupee weakened 0.8 per cent to 42.445 against the dollar after dropping to 42.6775. The currency is the third-worst performer among the most-traded Asian currencies outside Japan this year, losing 7.2 per cent. The currency has fallen about 8 per cent in the past six months as oil prices advanced 33 per cent. India's oil imports rose to a record $8.6 billion in March as per the government data.

This surge has been particularly seen as a huge respite for IT stocks which have underperformed the market in the last year. The YTD depreciation of INR by 7% would imply increase in the operating margins of these companies by nearly 300 basis points, thereby expected to post better quarterly results for Q1FY09.