<p>Mumbai: The Indian rupee could weaken to a record low of 98 against the US dollar by July as the energy shock triggered by the Middle East crisis continues to pile pressure on domestic assets, especially the currency, a BofA Securities executive told Reuters.</p><p>The rupee, Asia's worst performing currency this year, has been battered by the war-led energy shock that threatens to slow growth and push up inflation in India, which imports almost 90% of its crude requirements and half of its gas needs.</p>.Rupee falls 28 paise to 95.64 against US dollar in early trade.<p>Authorities have implemented several measures to protect the currency and preserve dwindling foreign exchange reserves, with some analysts expecting a rate hike as early as this week to protect the rupee, which slipped to a record low of almost 97 to the dollar on May 20.</p><p>The currency was last trading at 95.77 on Wednesday.</p><p>Heavy foreign selling of Indian stocks has also added to the pressure, with overseas investors withdrawing around $27 billion so far this year, surpassing last year's record outflows.</p><p>The persistent pressure on the currency has prompted some analysts to call for a rate hike when the central bank announces its monetary policy decision on Friday.</p>.Stock markets tumble in early trade; Sensex tanks 700 points.<p>David Hauner, head of global emerging markets fixed income strategy at BofA Securities, however, does not see an immediate need for a hike, but expects 25 basis-point increases each in October and December. He does not expect the Federal Reserve to raise rates this year.</p><p>"It is a more difficult situation, because globally, you are going to tighten financial conditions and again that is not an ideal situation for emerging markets, especially India," Hauner said.</p><p>He added that the RBI would probably avoid steep rate hikes even if inflation rises as tighter monetary policy could undermine growth.</p><p>Hauner expects foreign inflows to India to improve once energy supplies normalize, with the rupee likely recovering to around 93-94 against the dollar over the next 12 months or so.</p><p>"The currency will become more of a carry play, rather than a call that it would be appreciating a lot."</p>
<p>Mumbai: The Indian rupee could weaken to a record low of 98 against the US dollar by July as the energy shock triggered by the Middle East crisis continues to pile pressure on domestic assets, especially the currency, a BofA Securities executive told Reuters.</p><p>The rupee, Asia's worst performing currency this year, has been battered by the war-led energy shock that threatens to slow growth and push up inflation in India, which imports almost 90% of its crude requirements and half of its gas needs.</p>.Rupee falls 28 paise to 95.64 against US dollar in early trade.<p>Authorities have implemented several measures to protect the currency and preserve dwindling foreign exchange reserves, with some analysts expecting a rate hike as early as this week to protect the rupee, which slipped to a record low of almost 97 to the dollar on May 20.</p><p>The currency was last trading at 95.77 on Wednesday.</p><p>Heavy foreign selling of Indian stocks has also added to the pressure, with overseas investors withdrawing around $27 billion so far this year, surpassing last year's record outflows.</p><p>The persistent pressure on the currency has prompted some analysts to call for a rate hike when the central bank announces its monetary policy decision on Friday.</p>.Stock markets tumble in early trade; Sensex tanks 700 points.<p>David Hauner, head of global emerging markets fixed income strategy at BofA Securities, however, does not see an immediate need for a hike, but expects 25 basis-point increases each in October and December. He does not expect the Federal Reserve to raise rates this year.</p><p>"It is a more difficult situation, because globally, you are going to tighten financial conditions and again that is not an ideal situation for emerging markets, especially India," Hauner said.</p><p>He added that the RBI would probably avoid steep rate hikes even if inflation rises as tighter monetary policy could undermine growth.</p><p>Hauner expects foreign inflows to India to improve once energy supplies normalize, with the rupee likely recovering to around 93-94 against the dollar over the next 12 months or so.</p><p>"The currency will become more of a carry play, rather than a call that it would be appreciating a lot."</p>