The rupee fell to the weakest level in almost a year, as exchange data showed foreign investors increased sales of local stocks before data that may show growth in Asia’s third-biggest economy slowed.
Foreign funds sold $182 million more Indian shares than they bought in the first two days of this week, taking net sales so far this month to $1.85 billion, according to data published late yesterday by the Securities & Exchange Board of India. The $1.7-trillion economy grew 7.6 per cent in the three months ended June, the smallest gain in six quarters, according to the median forecast of 24 economists before a report due on August 30.
The sell-off in stocks “is putting psychological pressure on the rupee,” said Krishnamurthy Harihar, Mumbai-based treasurer at FirstRand Ltd. “The story behind the weakness is that global and Indian economies slowing down.”
The rupee dropped 0.1 per cent to 46.0565 per dollar at of the close in Mumbai, according to data compiled by Bloomberg. It touched 46.2250 earlier, the weakest level since September 16, 2010. The rupee’s four per cent loss this month is the worst performance among Asia’s 10 most-traded currencies.
The Federal Reserve’s decision to keep record-low interest rates and the possibility of more steps to stimulate the US economy may boost commodity prices and fan inflation in India, the South Asian nation’s central bank said on Thursday.
BONDS DIP
Government bond prices reacted downwards on fresh selling pressure from banks and companies.
The 7.80 per cent government security maturing in 2021 dropped to Rs 97.0725 from Rs 97.2450 yesterday, while its yield moved up to 8.24 per cent from 8.22 per cent. The 8.08 per cent government security maturing in 2022 declined to Rs 98.10 from Rs 98.2750, while its yield rose to 8.35 per cent from 8.32 per cent. The 8.13 per cent government security maturing in 2022 fell to Rs 98.4350 from Rs 98.61, while its yield looked up to 8.35 per cent from 8.32 per cent.
The 7.83 per cent government security maturing in 2018, the 8.28 per cent government security maturing in 2032, the 7.59 per cent government security maturing in 2016 and the 8.07 per cent government security maturing in 2017 were also quoted lower at Rs 97.7850, Rs 97.2650, Rs 97.52 and Rs 99.24, respectively.
CALL RATE DECLINES
The call rate eased at the overnight call money market here on Thursday due to lack of demand from borrowing banks. The overnight call money rate finished slightly lower at 8.00 per cent from yesterday’s closing level of 8.05 per cent. It moved in a range of 8.07 per cent and 7.55 per cent.
