India’s Rupee Falls to Five-Month Low as Economic Outlook Dims
India’s rupee fell to a five-month low on speculation international investors will increase sales of local assets on signs the region’s economies are weakening.
Morgan Stanley cut its growth forecast for India to 7.2 percent for the year ending March from 7.7 percent earlier, citing a less favorable global environment, according to a research note released today. Japan’s exports fell faster in July and Malaysia’s economy expanded the least since 2009 last quarter, separate reports showed this week. India’s Sensitive Index of local shares lost 2.2 percent as exchange data showed foreigners cut holdings by $1.3 billion this month.
“The economic climate has caused concerns about inflows into India,” said Sudarshan Bhatt, chief currency trader in Mumbai at state-owned Corporation Bank. “The drop in the stock market is affecting the rupee.”
The rupee declined 0.7 percent to 45.7475 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. That is the biggest drop since Feb. 24. It fell to 45.75 earlier, the weakest level since March 17.
Offshore forwards indicate India’s currency will trade at 46.09 to the dollar in three months, compared with expectations for a rate of 45.82 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
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