Mumbai: The rupee fell to a three-week low as a slide in stocks fuelled concern investors are selling local assets amid a deepening global economic slump.
The currency weakened for a second day after reports last week and on Monday showed Hong Kong and Japan sank into recession.
India’s benchmark stock index, the Sensex, fell for a fifth day as data from the market regulator, the Securities and Exchange Board of India (Sebi), showed global funds increased sales of local shares. The rupee has dropped 12.2% in the past three months.
“The rupee is weaker because of the poor sentiment across equity markets, local and overseas,” said Agam Gupta, head of trading at Standard Chartered Plc.’s Indian unit in Mumbai. “Capital account inflows have slackened and the current account is in deficit.”
The rupee declined as much as 0.9% to 49.80 per dollar, the lowest since 29 October, before closing at 49.64 at 5pm in Mumbai.
Overseas investors turned net sellers of Indian equities last week, dumping $324.9 million more than they bought, after purchasing a net $162.4 million in the previous week, Sebi data showed.
The global financial crisis and the growing risk of a worldwide recession have prompted investors to flee risky emerging markets and seek safer assets elsewhere.