Indian rupee at 13-mth low as oil, slowdown weigh

(Updates to close)

By Anurag Joshi

MUMBAI, May 13 (Reuters) - The Indian rupee dropped to a 13-month low on Tuesday, weighed down by concerns a slowing economy would result in less foreign inflows while uncertainty about global oil prices prompted refiners to buy dollars.

The partially convertible rupee ended at 42.10/11 per dollar, off an intraday trough of 42.2175, its lowest since mid-April 2007. It had closed at 42.05/06 on Monday. "There is oil demand, importer demand and exporters are not selling," said Agam Gupta, head of forex trading at Standard Chartered.

Oil CLc1, India's biggest import, traded above $124 a barrel, after touching a record of $126.40 on Monday. High global oil prices raise the risk of widening India's trade deficit and putting downward pressure on the rupee. India's trade deficit <INTRD=ECI> had widened 35.5 percent to $80.4 billion in the fiscal year ended March, largely due to soaring oil prices. Dealers said that weak factory data this week also raised worries of a slowdown in Asia's third-largest economy, reinforcing expectations the rupee may weaken further in the coming weeks.

Industrial output grew 3.0 percent in March from a year earlier, its weakest growth in six years as high interest rates squeezed demand for consumer goods, data showed on Monday. [ID:nBOM216199].

Citigroup expects growth to slow to 7.7 percent in the fiscal year 2008/09, down from a government estimate of 8.7 percent for 2007/08.

The risk of a slowdown has raised concerns that foreigners may not be very keen to invest in Indian stocks, weakening a key support for the rupee.

The stock market has fallen about 17 percent in 2008. Foreign funds have been net sellers of about $3 billion of stocks this year, a sharp turnaround from record buying of $17.4 billion in 2007. (Editing by Ranjit Gangadharan)