The Indian rupee fell to its lowest level in 2007 against the dollar on Monday, after another slide in local stocks sparked fears of capital outflows.
The partially convertible rupee weakened to 44.695 per dollar, mirroring weak Asian currencies, before ending at 44.625/640, 0.8 percent lower than Friday's 44.29/30.
"The fall in stocks has really hurt, and we're looking at another 10 paise drop if Asian currencies open weaker tomorrow," said a dealer at a private bank.
Indian shares fell 3.7 percent to their lowest close in five months, extending last week's 5.5 percent slide. The benchmark has fallen about 16 percent since its peak on February 9.
Asian currencies dropped weighed down by falling stocks across the region as a global sell-off continued amid shrinking risk appetite. MSCI's index of Asian stocks outside Japan fell about 3 percent.
Rating agency Standard and Poor's said on Monday that India's economic growth was likely to moderate in the next fiscal year beginning April, which may reduce demand for local stocks.
"Our projection for the year 2007/08 is 7.9 to 8.4 percent - a slight slowdown from the current year's performance due to the impact of interest rate increases, and liquidity constraints," Subir Gokarn, chief economist of S&P's Indian subsidiary CRISIL, said in a conference call with journalists.
The rupee ended at its lowest in more than a month on Friday as traders worried that a sharp sell-off in local stocks would trim capital inflows and dent the local unit's outlook.
The partially convertible rupee ended at 44.29/44.30 per dollar - its lowest closing level since January 30, according to Reuters data, and weaker than the previous close of 44.26/27.
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