Rupee crossed the 50-mark to the US $ on Wednesday, indicating a weakening of the currency. If short-term overseas credit taken by Indian companies as loans or as suppliers’ credit is not renewed, the pressure could increase because this would imply a draw down of up to $52.7 billion from the country’s foreign exchange pile.
Bankers say the rupee could weaken further. “Even if non-renewal of 65-70 per cent of the short-term debt happens then it will put pressure on rupee, leading to a depreciation of rupee,” said a senior official from a private sector bank on condition of anonymity.
However, the rupee has had some relaxation on the account of the falling oil prices. “The focus, however, has shifted now from current account deficit to short-term capital outflow and also there is a significant slowdown in exports,” said Jyotinder Kaur, an economist with HDFC Bank. “We have forecasted the rupee between 51.5 and 52 against a dollar by December 2008.”