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Rupee drops on speculation global funds will sell stocks

Rupee drops on speculation global funds will sell stocks
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First Published: Wed, Mar 14 2007. 01 48 PM IST
By Anoop Agrawal, Bloomberg
Mumbai: The rupee declined on speculation that overseas investors will sell the nation’s shares as reports showing the US economy is slowing diminish the appetite for emerging-market assets.
The currency dropped the most in six days as Asian stocks followed US equities lower, heightening concern global funds will shun the region’s assets for safer investments. The benchmark Sensex slid as much as 3.6%.
“The impact of the fall in US stocks has raised investors’ concerns about assets in Asia and the rupee has been pressured by that,” said Vikas Babu, a trader at Andhra Bank, Mumbai. “The rupee may fall further in coming days.”
The rupee fell 0.2% to 44.31 against the dollar early morning in Mumbai, according to data compiled by Bloomberg. It may decline to 44.40 in the next few days, Babu said.
Overseas investors sold $44.4 million more Indian equities than they bought this month to 12 March, according to the latest data provided by the Securities and Exchange Board of India.
US stocks erased three days of gains yesterday after the Mortgage Bankers Association said mortgage delinquencies increased, signaling the home-loan crisis in the world’s biggest economy is worsening.
The rupee may pare losses on optimism the decline in the currency will spur exporters to convert their foreign exchange earnings into rupees.
“The fall in the rupee appears to be temporary,” said Pankaj Sharma, chief currency trader at state-owned Union Bank of India. “It’s a reasonable time for exporters to convert their overseas earnings. The rupee may not fall further.”
The rupee may strengthen to 44.25 by the end of the month, Mumbai-based Sharma said.
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First Published: Wed, Mar 14 2007. 01 48 PM IST
More Topics: Money Matters | Global Markets |