India’s rupee a victim of global turmoil

NEW DELHI, October 2, 2011 (AFP) – India’s rupee has slid nearly 10 percent in three months against the dollar, a consequence of global economic uncertainty that will stoke already high inflation in Asia’s third-biggest economy. The rupee’s tumble makes import prices of everything from oil, fertilizers to food staples such as pulses, fuelling near-double-digit inflation and causing bigger hardship for India’s poor millions.

“The last thing India needs now is imported inflation,” Biswajeet Dhar, head of Research and Information Systems for Developing Countries, a Delhi think-tank, told AFP. “We’re walking into a phase of even higher inflation.”

In the three-month financial quarter to September 30, the currency has fallen by about nine percent to 48.9 rupees to the dollar as investors fret about Europe’s spiralling debt crisis and the sputtering US economic recovery.

Money has flowed out of emerging markets and into safe assets such as US Treasury bills which are considered the safest bet in a crisis.

It has been the biggest quarterly drop by the rupee since the collapse of Lehman Brothers in September 2008 triggered the last global financial crisis.

The slump comes at a bad time for India, with ec