Rupee falls to 17-month low

Mumbai: India's rupee dropped to the lowest in almost 17 months on Monday on speculation refiners increased purchases of crude oil.

Companies including Indian Oil Corporation, the nation's biggest refiner, may have bought the dollar to acquire more crude after the price of oil touched the lowest in more than three months on August 15, according to Sudarshan Bhatt, chief currency trader at Corporation Bank.

India's markets were closed that day for a holiday. The rupee fell for a fifth day, the longest losing streak in more than eight months.

"Crude oil is still not at levels where Indian refiners can breathe easy and hence dollar demand is persistent,'' Mumbai- based Bhatt said. "Pressure on the rupee may increase the pace of its decline in the near term.''

The rupee weakened 1.3 per cent to 43.5985 per dollar at the 5pm close in Mumbai, from 43.055 on August 14, according to data compiled by Bloomberg. That's the lowest close since March 29, 2007, and the decline is the most since August 16, 2007.

The currency may decline to 44 within a month, Bhatt predicted. The rupee last slid for five days or more in a row in the period ended November 28.

The price of crude oil on the New York Mercantile Exchange has tumbled 22 per cent since July 11, when it reached a record of $147.27 a barrel, reducing costs for Indian refiners. India imports more than 70 per cent of its annual oil needs.

Staff at State Bank of India, the nation's biggest, and its seven subsidiaries went on strike yesterday, protesting the merger of State Bank of Saurashtra with the lender, a union official said.

About 60,000 officers of State Bank and another 20,000 at seven subsidiary banks stayed away from almost 15,000 branches yesterday, G.D. Nadaf, general secretary at the All India State Bank of India Officers Federation said by phone from Bangalore.

The 59.73 per cent government-owned State Bank of India got approval to absorb the subsidiary, according a statement sent to the Bombay Stock Exchange on August 14.

The rupee's biggest decline in more than a year was also driven partly by speculation that stock losses will deter investors from buying local assets.