Re falls further as oil spurs dollar demand

The rupee extended a four-week slump as crude oil futures in New York climbed to an all-time high of $130.47 a barrel, spurring concerns that higher energy costs will damp economic growth and widen the nation's trade deficit.

The rupee is the second worst performer among the 10 most-traded Asian currencies this year, excluding the yen.

"Uncertainty has increased because the implications of higher oil prices are far deeper on the rupee,'' said Sudarshan Bhatt, chief currency trader at the state-owned Corporation Bank in Mumbai. "Dollar demand may increase as we move closer to the end of the month. So the rupee may weaken further.''

The rupee declined 0.5 per cent to 42.83 a dollar at the 5 pm close in Mumbai, the lowest since April 12, 2007, according to data compiled by Bloomberg. It may weaken to 43 in the next few days, Bhatt said. India imported oil worth $71.8 billion in the 12 months through March, 23.5 per cent more than a year earlier.

The current-account shortfall widened to $5.4 billion in the three months ended December 31 from $3.7 billion a year earlier and $4.7 billion in the preceding quarter, the central bank said on March 31.