Mumbai: The rupee declined for a sixth day, its worst run in almost nine months, on speculation stock losses will spur investors to reduce local assets.
The currency fell to the lowest in more than 16 months as the benchmark stock index fell for a fifth day, extending this year’s loss to 28%. Global funds have sold $6.7 billion (Rs28,944 crore) more Indian shares than they bought this year, according to data provided by the Securities and Exchange Board of India. Trading volume in the currency market was lower on Tuesday because of a public holiday in Mumbai, the nation’s financial centre.
“Global investors are increasingly uneasy about the movements in the equity markets and are therefore reducing their exposure,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. “The rupee is headed for a further decline.”
The rupee closed at 43.615 a dollar at 5pm, the lowest since 29 March 2007, versus 43.5985 on Monday, according to data compiled by Bloomberg.
It rose earlier on speculation a four-day slide in crude oil prices will reduce demand for dollars. The commodity traded near a 15-week low in New York.
“Crude is coming close to levels where dollar demand may slow down,” said Roy Paul, assistant manager of treasury at Federal Bank Ltd in Kochi. “The pressure on the rupee is slowly subsiding.”
Cheaper oil prices may help reduce costs for Asia’s third biggest economy, which meets three-quarters of its energy needs with imports. Crude oil has declined almost 24% from its all-time high of $147.27 a barrel reached on 11 July.
India’s average crude imports climbed to $8 billion a month this year from $5.5 billion in 2007, Bloomberg data show.