As per the data compiled by Bloomberg, the Indian rupee fell 0.3 percent on Monday to 48.83 per dollar, largely because the government's failure to spur any notable boost of the economy, in its short-term budget for the next fiscal year.

With the government having said its budget deficit would increase more than two times in the year ending March 31, the rupee dropped on supposition that holdings of local assets will be trimmed by investors.

The strategists and economists surveyed by Bloomberg opine that the rupee may weaken further to 49 by March-end. Roy Paul, assistant manager of treasury at Mumbai's Federal Bank Ltd, said that in the days ahead, the currency may trade between 48.50 and 49.25.

The chief reasons for the fall of the rupee in 2008 was depletion of foreign funds from stocks - foreigners, who sold more than $13 billion Indian shares last year, have already pulled out nearly $967 million this year.

In addition, as India has increased spending to offset the deepest economic downturn in six years, the rupee weakened as the country's projected budget shortfall may increase 6 percent of its gross domestic product - much higher than the earlier estimated 2.5 percent rise!

Paul said: "India's fiscal deficit situation is in no way encouraging and that could put pressure on the rupee to weaken."