The rupee weakened for a third day, retreating 0.6 percent to 67.14 a dollar in Mumbai.
New Delhi - Arab Today
India’s rupee posted its biggest decline in more than three weeks on concern foreign funds will cut equity holdings after losses in local stocks deepened.
The S&P BSE Sensex index of Indian shares slumped 0.9 percent, taking its three-day drop to 2.3 percent, as demand for emerging-market assets waned amid concern about the outcome of the "Brexit" vote and before this week’s central bank meetings in the US and Japan. Consumer-price gains in India probably accelerated to a four-month high of 5.6 percent in May, a Bloomberg survey showed before official data due later on Monday.
The rupee weakened for a third day, retreating 0.6 percent to 67.14 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. That’s the biggest drop since May 19 and took its loss in 2016 to 1.5 percent, Asia’s worst performance. The currency may decline to as low as 67.80 in the coming months, according to Edelweiss Financial Services Ltd.
“Investors are nervous ahead of big events such as the Federal Reserve meeting and the UK referendum,” said Ankur Jhaveri, co-head of currency and rates at Edelweiss Financial Services in Mumbai. “That’s driving them toward safe-haven assets. We see the rupee depreciating more given the global uncertainties.”
Foreign investors bought $32.8 million more Indian shares than they sold on Friday, the smallest inflow in four days, data compiled by Bloomberg show. They have poured a net $2.81 billion into local equities in 2016. Recent polls indicating the UK’s June 23 referendum on EU membership is too close to call is spurring fear in global investors already on the edge given the monetary-policy reviews in the US and Japan.
Indian sovereign bonds dropped ahead of the inflation data. The yield on notes due January 2026 climbed three basis points to 7.53 percent, its highest close since March 16, according to prices from the central bank’s trading system. That’s the biggest advance since April 21.