By Anoop Agrawal Oct. 23 (Bloomberg) -- India's rupee weakened to a record low against the dollar as Asian stocks slumped, heightening concern overseas funds will sell more local equities. The currency fell for a seventh day on speculation the government's decision to raise the limit on loans Indian companies can get from abroad will fail to increase the supply of foreign exchange in the local market, said Sanjay Arya, a treasurer at state-owned Bank of Maharashtra. The central bank yesterday eased the overseas borrowing rules for domestic firms, lifting curbs imposed last year. The announcement was made after the financial markets closed. ``The global credit environment is still that of pessimism and the availability of funds is still difficult, which is why we should not expect easier overseas borrowing rules will result in dollar supply any time soon,'' Mumbai-based Arya said. The rupee slid as much as 1.2 percent to 49.860 per dollar, before trading at 49.76 at 10:13 a.m. in Mumbai, from 49.285 yesterday, according to data compiled by Bloomberg. It may fall to 50 in coming days, Arya said. The Reserve Bank of India said local companies can borrow up to $500 million in a financial year without prior approval and can repatriate the funds as long as they don't invest the money in capital markets or real estate. It also raised the cap on borrowing costs enabling companies to access funds. Last year, the government told companies they couldn't repatriate more than $20 million. Share Sales Sales of Indian shares by overseas investors this year exceeded purchases by a record $12.1 billion as the benchmark Bombay Stock Exchange Sensitive Index, or Sensex, slid 52 percent. The measure fell as much as 4.8 percent in early trade. The MSCI Asia Pacific Index of regional shares tumbled 3.7 percent after a 5.4 percent decline yesterday. Losses in the rupee may be tempered on speculation the central bank will buy the currency to prevent imports from becoming more expensive. ``The central bank will intervene to remove the speculative elements by supporting the rupee,'' said K.V. Mallik, treasurer at state-owned UCO Bank in Kolkata. Reserve Bank of India spokeswoman Alpana Killawala said the central bank doesn't comment on daily rupee movements. Central banks intervene in currency markets by arranging sales or purchases of foreign exchange. A weaker currency increases costs for companies such as Indian Oil Corp Ltd., the nation's largest refiner. These companies face losses because under Indian rules they have to sell fuel products at prices below their costs. India meets almost 75 percent of its crude oil needs from imports. The nation's foreign-exchange reserves fell to $274 billion on Oct. 10, from a record high of $316 billion in May, indicating the central bank has sold the U.S. currency. The reserves declined $9.9 billion in the week ended Oct. 10, the biggest drop since Bloomberg started compiling the data in 2000. To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

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