Re Crashes to Record Low as Investors Rush for $ Cover

Re, the worst performing Asian currency, ends day at 52.84 a dollar   The rupee tumbled to its alltime low as jittery global investors pulled out funds amid fears of deteriorating economic health. With the country's index of industrial production (IIP) contracting more than 5% and the government admitting to a higher-than-reported trade deficit — $9-billion export surge goof-up — global investors are looking for exits.  International investors took flight to safety of the US dollar amid heightened fears that the fifth rescue plan in two years to rescue the European monetary union might unravel as the vital European Central Bank has not committed to bail countries out. With fears of tightening liquidity for US dollars in the international markets, importers — mainly oil companies — rushed to raise funds, accelerating the downfall. The rupee, the worst performing Asian currency, fell 1.5% to 52.84 per dollar, surpassing the previous intra-day low of 52.73 on November 22. Morgan Stanley estimates the Indian currency will fall to 54.80 by the second quarter of 2012.  "The fall is mainly due to FIIs selling out on weak economic fundamentals and also the fall in the euro against the dollar," said NS Venkatesh, head, treasury, IDBI Bank. "Right now, we don't have the wherewithal to handle the score of issues, so the exchange rate might suffer in the very short run, before bouncing back.''  International investors, who poured in a record $29 billion last year, are pulling out funds. They sold equities worth . 428.3 crore. Notwithstanding the high demand for Indian government and coporate bonds during the last auction of permits to buy them, fresh funds are now flowing in, pressuring the rupee. The weak currency has also dealt a blow with slowing exports and surging imports — the nation imports more than threefourths of its needs. Furthermore, the revision in the export data dented sentiment.  India's export numbers in November stand at $22.3 billion, a growth of about 3.7% from a year earlier, the slowest pace in more than two years. Rahul Khullar, commerce secretary, has clarified that the export numbers for the last eight months have been exaggerated by $9 billion. "Notwithstanding the misclassification, there were errors in double counting, which inflated exports by about $9 billion," he said.  The revised numbers of overseas sales in the April-November period stood at $192.7 billion. The Reserve Bank of India, whose foreign exchange reserves have fallen more than $13.5 billion since October end to $306.8 billion did not intervene vigorously.