Rupee plunges to record low

MUMBAI, Nov 22 (Agencies): India's rupee fell to a record, prompting the central bank to say it's weighing action to stem the worst performance in Asia this year. The rupee weakened 0.3 per cent to 52.3225 per dollar in Mumbai, bringing its decline in 2011 to 14.6 per cent. The BSE India Sensitive Index (SENSEX) of shares tumbled 22 per cent in the period as investors sold emerging market assets on concern the U.S. and Europe will struggle to curb deficits. The rupee's slump is raising costs for companies including Hindustan Unilever Ltd. (HUVR) and Maruti Suzuki India Ltd. (MSIL) A further drop will also spur price gains and increase fuel subsidy costs in Asia's third-largest economy, which imports 80 per cent of its fuel. Inflation has held above 9 per cent for 11 consecutive months, while higher interest rates are threatening to slow the pace of economic expansion. Meanwhile, Cotton prices in India are likely to fall substantially in the next two months as the biggest importer, China, cuts orders at a time when domestic supplies are set to peak and Indian buyers remain on the sidelines as demand for yarn is weak. Indian cotton, now trading at 37,200 rupees ($710) per candy of 356 kg, or 104,000 rupees ($2,000) per tonne, is set to fall by between 14 per cent and 15 per cent to 32,000 rupees per candy in December and remain at that level, said B. A. Patel, the country's joint textile commissioner. Traders also said they expected a similar drop. Prices have so far fallen nearly 40 per cent since hitting a record high of 61,700 rupees per candy in March.