India’s Rupee Drops as Recession Concern Prompts Funds to Sell

Dec. 29 (Bloomberg) -- India’s rupee weakened a second day on speculation a deepening economic slowdown worldwide prompted global funds to reduce holdings of the nation’s assets.

The rupee extended last week’s losses as data from the stock market regulator showed foreigners sold more Indian shares than they bought for a third day through Dec. 24. The benchmark Bombay Stock Exchange Sensitive Index, or Sensex, declined 1 percent today, taking this year’s drop to almost 55 percent. The global slump may slow the pace of India’s expansion to the least since 2003, government estimates show.

“The underlying view is that the global equity situation will be bearish for a few months, which is why we are seeing a persistent decline in asset prices,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. “I expect the rupee to remain pressured in the long term.”

The rupee declined 0.8 percent to 48.815 per dollar as of 11 a.m. in Mumbai, according to data compiled by Bloomberg. Its 19.3 percent slide this year is the second-worst performance among the 10 most-active currencies in Asia outside Japan.

Net sales of Indian equities by overseas investors have exceeded a record $13.3 billion this year, according to data released by the Securities and Exchange Board of India.

To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.