MUMBAI: The rupee, which hit an unprecedented string of all-time lows last week, is set for more falls unless policymakers move quickly to put Asia's third-largest economy back on track, analysts say.
The rupee, which slumped to as low as 56.38 to the dollar last week, pulled back marginally to 55.29 on dollar profit-taking Monday but Indian brokerage Emkay forecast the currency could drop to 60 if weak economic growth persists.
"The Indian rupee's weakness is a symptom and not the underlying problem", which is "policy incoherence, shifting global risk appetite and a comatose government", said Rajeev Malik, senior economist at independent brokerage CLSA.
Ratings agency Standard and Poor's has cut India's credit outlook to negative, growth is slowing and the current account deficit -- the widest measure of a country's trade with the rest of the world -- is at a three-decade high.
Prime Minister Manmohan Singh has admitted his squabbling Congress-led coalition must do more to get the once red-hot economy moving again.
"I will be the first to say we need to do better," the 79-year-old said as he presented his coalition's annual report card at a function last week.
Singh is credited with opening India's economy when he was the finance minister in 1991 but his premiership has been tainted by a series of policy U-turns and corruption scandals.
His once ambitious reform agenda has stalled amid coalition infighting, and the economic climate has been further strained by the announcement of new tax policies seen as hostile to foreign investment.
