The Indian rupee closed at its lowest level against the dollar in nearly 1-1/2 years on Monday as importers stepped up dollar purchases and as a record monthly trade deficit weakened sentiment. The trade deficit in July was $10.8 billion, widening from $9.8 billion in June.
For April-July, the first four months of the fiscal year, the deficit widened to $41.23 billion between April-July from $27.35 billion a year earlier. The partially convertible rupee closed at 44.17/18 per dollar on Monday, its lowest close since mid-March 2007 and 0.5 percent lower than Friday's close of 43.935/945. It fell to as low as 44.23 in early deals.
The rupee has fallen 10.8 percent so far in 2008 to be one of the weakest Asian currencies against the dollar. It rose more than 12 percent in 2007. "Importers have been buying heavily today and only central bank intervention has checked the fall," said V. Rajagopal, head of currency trading at Kotak Mahindra Bank, who expects the rupee to fall to 44.50 in the near term.