New Delhi/Hyderabad, Nov 22
The rupee today slipped to an all-time low of Rs 52.73 to a dollar in the morning before recovering somewhat to close at Rs 52.30.

On the first day of August, Indian importers paid Rs 44 for every dollar. In September, they paid Rs 49 and now in November it breached the Rs 52 mark. The demand for dollars is weakening the rupee further and making imports, specially oil imports, costlier. The value of the rupee has fallen by over 16 per cent during the last four months, the fastest slide in history, said former Union Finance Minister Yashwant Sinha.

The depreciating rupee is also likely to hit Indian companies which resorted to External Commercial Borrowing ( ECB) lured by the lower rates of interest abroad compared to the rates prevailing in India. Indian companies are believed to have raised Rs 150,000 crores abroad this year and if the slide of the rupee continues or remains at the current level, they will find it costlier to repay the loans. The additional burden of repayment was estimated at Rs 27,000 crore today.

ECBs used to be available at about 5-7% interest rates, where as rupee denominated loans from Indian banks were available at 12-14% interest rates. Hence, several Indian corportates have chosen the ECB route for borrowing instead of Indian rupee loans, in anticipation saving about 5-7% of interest cost.

However, such Indian corporates are realisng now the side effects of non-rupee borrowing. In the case of non-rupee borrowing, the forex fluctuation can be very punishing, as it is happening now, says research by SMC Global.

In Hyderabad, the Reserve Bank of India Governor D Subbarao expressed the hope that the rupee would recover once the European crisis gets resolved. Blaming ‘external and global factors’ for the slide, he said the RBI had not yet decided when to intervene in the forex market to arrest the slide of the local currency.

“Of course, the RBI can intervene but it will do so only when it is consistent with its policies.

Significantly, the RBI Governor voiced his concern at inflationary pressures and asserted that the government’s ‘food for work’ programme and proposed food subsidy would further increase fiscal deficit and add to inflationary pressures.

What has caused all round concern is the speed at which the rupee slipped during the past few weeks. Financial analysts said they expected the rupee to slide further and hit corporate profitability and the next quarterly results.