No more whoopee for Indian rupee

NEW DELHI, May 23, 2008 (AFP) – India’s currency is feeling the pressure as world oil prices soar and foreign investors lose their “risk appetite” for emerging market assets amid global financial turmoil, analysts say. The Indian rupee — which a few months ago was trading at 10-year highs — now looks poised to post its worst monthly decline in a decade, analysts say.

“After having appreciated pretty much continuously against a soft US dollar since August 2006, the tide has turned for the rupee,” said HSBC economist Robert Prior-Wandesforde.

After touching a peak in early February of 39.4 to the dollar, the rupee has fallen by 9.5 percent, nearly wiping out last year’s 12 percent gain. It traded against the greenback Thursday at 43.15.

Its slide has been greased by fears a 40 percent jump in oil prices this year and rises in other global commodity prices along with a tight monetary policy to tame inflation will depress growth and boost India’s already soaring current account deficit, a measure of trade and investment flows.

The problem of oil prices, which catapulted above 135 dollars a barrel for the first time on Thursday on fears about rampant demand exceeding supply, is particularly acute for In