MUMBAI: The rupee closed at a new provisional record closing low of 53.9750 to the dollar as global risk aversion spiked and as higher-than-expected domestic inflation data hit stocks by lowering expectations for future rate cuts. The rupee came very close to falling below the psychologically key 54-level and ended not far from the record low of 54.30 hit in mid-December. Standard Chartered is of the view that the rupee is facing choppy trading in the near-term. It expects another 2-3 per cent weakening of the rupee from the current levels amid global uncertainty. The bank has also lowered its medium-term rating on the rupee to 'neutral' from 'overweight' as continued policy inertia lowers the possibility of sustained inflows. The bank has recommended that dollar based investors in Indian assets should maintain high short-term foreign exchange hedge ratios. It is of the opinion that importers should keep high foreign exchange hedge ratios in the ruppe for the short-term. The bank expects exporters to remain sidelined until a record high of around 54.30 is tested.

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