The rupee hit another low below the 55-dollar mark on Monday due to resurfacing of the European crisis and subdued index of industrial production (IIP) numbers.
It recorded Rs. 55.12 a dollar in the intra-day trading, the lowest level in two months.
However, it recovered to close at 54.88/89, still down 13 paise against 54.75/76 in the previous day.
“The fall of rupee was caused by resurfacing of the European crisis and poor IIP numbers,” said Pramit Brahmbhatt, CEO, Alpari Financial Services.
“I believe the rupee will improve by end-December to 52-53 level against the dollar,” Mr. Brahmbhatt added. However, he said, the near-term market is likely to see the rupee touching as low as 55.50.
While the European debt crisis is still continuing as an unresolved issue for global markets, the industrial output numbers are painting a disappointing picture for markets. Industrial output contracted by 0.4 per cent in September 2012 and its growth for the first half of this financial year stands at 0.1 per cent against 5.1 per cent for the same period last year.
Crisil, a rating agency, said that industrial weakness is expected to continue in the near-term and “industrial output growth in 2012-13 appears to be heading towards a performance which will be even worse than the last fiscal. Any delay in the economic reforms announced by the Government, like foreign direct investment in retail segment, would further weaken the rupee against the dollar.