Mumbai: India’s rupee fell for a fourth week, its longest losing streak in more than two months, as a slide in the benchmark stock index prompted global funds to sell local assets.
The currency touched an almost two-month low this week as latest data from the market regulator showed overseas funds sold more stocks than they bought for a third day through 2 September, with the Bombay Stock Exchange Sensitive Index falling 1.5% in the week. The rupee also declined on speculation some local refiners bought foreign currency to pay for crude oil.
There’s preference for safer assets because investors are confident that equities won’t be attractive in the near term, said Viswanathan Kumar, chief currency trader at State Bank of Travancore in Mumbai. That has also led to some refiners covering dollar demand.
Losing streak: The rupee has lost 2.3% over the past month, the second worst performance among Asian currencies after the Indonesian rupiah. Rajkumar/Mint
The rupee dropped 0.5% this week to 48.89 per dollar at close, according to data compiled by Bloomberg. It has lost 2.3% over the past month, the second worst performance among Asian currencies after the Indonesian rupiah.
Indian refiners stocked up on foreign exchange, betting imports will climb on a rebound in Asia’s third largest economy and drive commodity costs higher. India depends on crude imports to meet about 70% of its annual energy requirements.
The rupee reached 49.205 on 2 September, its weakest level since 13 July, after a 53% rally in oil this year.
The government on 31 August said gross domestic product expanded 6.1% in the three months to 30 June from a year earlier, following a 5.8% growth in the previous quarter.
Offshore contracts indicate bets the rupee will trade at 48.99 to the dollar in a month, compared with expectations for a rate of 49.03 on Thursday. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non- deliverable contracts are settled in dollars rather than the local currency.