Fitch ratings warning on India's slowing economic growth and the possibility of a rating downgrade in the next one year sent the rupee lower today, reinforcing worries that India is still at risk of losing its investment-grade rating from the credit agency.
The rupee fell as much as 55.38 per dollar after the rating agency's comments, and was trading at 55.29/30 as of 1:03 p.m., weaker than its 55.23/24 close on Monday.
The Indian economy extended its long slump in the September quarter, growing only 5.3 percent from a year earlier, below the 5.5 percent expansion seen in the three months to June, keeping it on track for its worst year in a decade.
Failure of the finance minister to come up with a proper guidance on restricting the fiscal deficit to 5.3%, is likely to put pressure on the rupee in the coming months.
In an interview with CNBC-TV18, Jayesh Mehta, Bank of America said the Indian currency will be rangebound till the Budget. "We might see some appreciation, but we do expect it to depreciate on a longer term, unless something dramatically changes," he said.