POLL - Rupee seen recovering to 45.50/dlr by end-Dec

By Swati Bhat

MUMBAI (Reuters) - The rupee is expected to recover from recent two-year lows in coming months, aided by the Reserve Bank of India (RBI), but will still finish 2008 more than 13 percent below where it started, a Reuters poll showed on Wednesday.

The rupee hit 46.99 per dollar on Tuesday, according to Reuters data, its weakest since July 2006 and just short of a five-year low. At the trough, it was down more than 16 percent in 2008.

The rupee recovered ground on Wednesday, closing at 46.33/35.

According to a median forecast in the Reuters poll of 10 economists, the rupee will climb back to 45.50 by the end of this year. That will still leave it 13.4 percent below its 2007 close of 39.41.

Economists said easing oil prices and a statement this week by the RBI that it would continue propping the currency up, after much dollar-selling intervention in recent weeks, were the two main factors likely to help it.

"There is some improvement over time in the current account deficit situation with the oil prices coming off so much, and hopefully if the global financial turmoil settles down, then we may see some capital inflows coming in as well," said A. Prasanna, economist with ICICI Securities.

After appreciating more than 12 percent against the dollar last year, the rupee has faced heavy pressure from rising risk aversion among foreign investors and record oil prices, as India imports about 70 percent of its oil.

Oil has fallen more than $50 per barrel from $147 in July, relieving pressure on the import bill, but market turmoil worldwide and concerns of slowing growth in India have seen foreigners sell a net $8.7 billion in shares so far this year.