Rs 114-bn PNB fraud adds to Rupee's woes as banks may tighten trade credit

The rupee is set for its worst week since September as traders cite enhanced demand for dollars in spot and forwards market

The $2 billion fraud unearthed at Indian lender is casting its shadow over the rupee, already the second-worst performer in Asia this month, as banks tighten the availability of trade finance.

There’s concern that banks won’t roll-over existing trade credit as they increase scrutiny of short-term borrowing facilities linked to imports or exports in the wake of the fraudulent transactions at Punjab National Bank. Fewer rollovers have hurt the rupee in the past two weeks, Credit Suisse analysts including Neelkanth Mishra wrote in a note Friday.

The scam involved jeweler Nirav Modi, in connivance with rogue bank employees, using fake