Re plunges in longest free fall since ’06

Re plunges in longest free fall since ’06

Mumbai: India’s rupee fell for a fifth day, extending its losing streak to the longest since August 2006, on concern a slide in local equities will spur investors to take money out of the country.

The currency declined after data from the capital markets regulator, Securities and Exchange Board of India (Sebi), showed funds based abroad increased sales of local equities this month.

The rupee also dropped on concern a rally in oil prices will lift India’s import costs, widening its trade deficit. The South Asian nation depends on imports to meet as much as three-quarters of its energy needs.

“The rupee’s trend is now closely linked to movements in the stock market," said Paresh Nayar, chief foreign exchange dealer at the Development Credit Bank Ltd in Mumbai. “There’s a bit of currency weakness since stock flows have turned negative."

The rupee declined 0.4% to 39.535 per dollar as of the 5pm close in Mumbai.

That is the biggest decline since 22 October.

The rupee, Asia’s second best performer this year with a 12.3% gain, has strengthened in the past five quarters.

It may rise to 39.25 by the year-end and 39 by the end of March, according to the median estimate in a Bloomberg survey.

“Dollar demand from oil importers is also putting some pressure on the rupee," Nayar said.