Actively traded three-month forwards ended at 139.00/10 per dollar, compared with Tuesday’s close of 137.10/40.
“If the Central Bank is going to reduce the interest rate further, then the worse is yet to come,” a currency dealer said on condition of anonymity.
“The Central Bank needs strong dollar inflows. If it fails to do so then it has to correct the monetary policy with tightening.”
Dealers said lack of greenback conversions by exporters, who are managing their costs locally with cheaper rupee loans in a lower interest rate environment, was weighing on the currency.
The Central Bank allowed the spot rupee to fall 0.15%, or 20 cents, to 133.90 on Tuesday, near its record low of 134.10, hit on 28 June 2012, Thomson Reuters data showed.
Some dealers said the depreciation was not adequate and the market had adjusted to trade forwards after the central bank was seen preventing the spot currency from falling sharply.
A currency dealer said with the three-month forwards trading around 139.00, the implied spot rupee should be around 137.20 per dollar. But the Central Bank has kept the spot at 133.90.
The Central Bank has allowed the spot to fall 0.75%, or by 1 rupee since 30 April to account for broad gains in the dollar and rising credit demand in a low interest rate environment.
Two-month forwards were unchanged at 135.50/80 per dollar and one-month forwards were steady at 134.70/90, as the Central Bank prevented falls, dealers said.
However, a Central Bank official told Reuters on condition of anonymity on Tuesday that the regulator only intervenes in the spot market and never fixes prices on the forwards.