Rupee-dollar equation hit a low of 52.70 this week, spreading panic across the trade chain of importers and exporters. Yes, even exporters could be negatively affected by the recent downward spike of rupee to new life lows.

Most big exporters hedge their revenues to balance the impact of excess volatility in rupee fluctuation against a US dollar. However, sharp rupee depreciation would lead to rise in travel, wage and power expenditures over a period of time.

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With the euro zone sovereign debt crisis set to worsen further going forward, forex analysts are projecting the rupee value to slump to a low of 54 by the end of the year. Moreover, apart from Greece, the euro zone’s third largest (Italy) and fourth largest (Spain) economies are both brewing troubles and are tagged as too-big-to-bailout.

Domestically, India’s trade deficit has burgeoned to a record $19.6 billion in October 2011 as compared to a year ago period, putting further pressure on rupee valuations. India’s exports during October stood at $39.5 billion, up 36.7% from last year data.

So, will Rupee inch down to 54 per dollar by Dec 2011?

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