India's Rupee Weakens Past 43 a Dollar as Oil Increases Costs

India’s rupee weakened past 43 a dollar for the first time in more than 13 months as crude oil’s advance to an all-time high increased demand for dollars needed to buy the commodity.

The rupee fell for a third day on concern the 40 percent increase in oil prices this year will slow growth in Asia’s third-largest economy and widen the nation’s current-account deficit from last year’s record. The local currency is the second-worst performer this year among the 10 most-traded Asian currencies excluding the yen.

``There are fundamental reasons for the rupee to fall given our dependence on imports to meet energy requirements,’’ said Ravindra Babu, a currency trader at state-owned Andhra Bank in Mumbai. ``There are growing concerns about the current-account deficit widening which may cause the rupee to decline further.’’

The rupee dropped as much as 0.9 percent to 43.21 against the dollar, the lowest intraday since April 3, 2007, before trading at 43.1525 as of 10:06 a.m. in Mumbai, according to data compiled by Bloomberg. It may fall to 43.50 in the next few weeks, Babu said.

The rupee’s decline gathered pace after a government report on May 12 showed the annual pace of growth in factory output more than halved to 3 percent in March from 8.6 percent the previous month.

Paring Advance

The local currency is headed for a fifth weekly loss and has slid 8.6 percent this year, erasing more than two-thirds of its 12.3 percent gain last year. India imported oil worth $71.8 billion in the 12 months through March, 23.5 percent more than a year earlier.

The current-account shortfall widened to $5.4 billion in the three months ended Dec. 31 from $3.7 billion a year earlier and $4.7 billion in the preceding quarter, the central bank said on March 31.

Growth in Asia’s third-biggest economy may decelerate to about 8 percent, the slowest since 2005, in the fiscal year that started April 1, according to Finance Minister Palaniappan Chidambaram. The economy expanded 8.7 percent in the 12 months through March, slower than the 9.6 percent growth in the previous year.