Re falls for fifth week on meltdown concerns

Re falls for fifth week on meltdown concerns
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First Published: Fri, Sep 12 2008. 11 23 PM IST
Updated: Fri, Sep 12 2008. 11 23 PM IST
The rupee declined a fifth week, the longest stretch since May, as global funds shunned emerging-market assets on concern the economic slump is spreading from the US to Europe and Asia.
Data from market regulator Securities and Exchange Board of India (Sebi) showed overseas investors sold more Indian shares than they bought on five of the seven trading days this month.
Also, demand for dollars from importers and capital outflows have increased concern that India’s current-account deficit will widen.
“The demand-supply balance and the fundamentals are against the rupee,” said V. Rajagopal, chief currency trader at Kotak Mahindra Bank Ltd. “There’s no reason why this trend should not continue in the short term.”
The rupee declined 2.35% this week to 45.71 a dollar at Friday’s close in Mumbai, according to data compiled by Bloomberg.
A government report meanwhile showed industrial production rose 7.1% in July from a year earlier, after rising 5.4% the previous month. Factory-output growth has slowed to a monthly average of 6.3% in 2008 from 9.9% last year, Bloomberg data show.
Another report last month showed the economy expanded 7.9% in the three months through June, the slowest pace since the last quarter of 2004.
Foreign investors were net sellers of Indian stocks for a fifth straight month, dumping $7.6 billion this year, according to Sebi data. They bought $19.5 billion in stocks and bonds last year, helping the rupee rally 12.2%. The currency has since erased all of those gains.
The US dollar has advanced against all of the 16 major currencies tracked by Bloomberg in the past three months as commodities declined.
The nation’s current-account deficit, a measure of trade and investment flows, widened to $17.4 billion in the financial year ended 31 March from $9.8 billion in the previous year, central bank data show.
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First Published: Fri, Sep 12 2008. 11 23 PM IST