The rupee weakened, completing its worst month since February 2009, after Europe’s debt crisis triggered a surge in markets volatility, spurring investors to sell assets of emerging nations.
The currency snapped a two-day gain after overseas funds this month sold an average $126 million of shares a day more than they bought, following net daily purchases of $111 million in April, according to data released by the Securities and Exchange Board of India.
“The rupee is weaker because stock-market sentiment is still shaky and capital outflows haven’t stopped,” said Sudarshan Bhatt, chief currency trader in Mumbai at state-owned Corporation Bank.
The currency slid 4.3 per cent this month, the second-worst performance among Asian currencies after South Korea’s won, to Rs 46.37 per dollar as of the 5 pm close in Mumbai, according to data compiled by Bloomberg. It declined today from the May 28 close of Rs 46.36.
Offshore forwards indicated the rupee will trade at Rs 46.57 to the dollar in three months, compared with expectations of Rs 46.79 at the end of last week.
Bonds decline
The 10-year bonds declined for a fifth day, the longest run of losses since February, as a report showing faster economic growth fuelled speculation that the central bank would raise borrowing costs for a third time this year.
Yields on the notes climbed to a three-week high after the statistics office said GDP rose 8.6 per cent last quarter from a year earlier, after a revised 6.5 per cent gain in the previous three months. The Reserve Bank of India raised its benchmark rate by a quarter percentage point each in March and April to the current level of 3.75 per cent.
