India’s rupee declined to the lowest level in a week on concern slowing global growth will damp demand for the nation’s equities.
Official data today showed China’s first-quarter gross domestic product rose 7.7 percent, less than the 8 percent median estimate in a Bloomberg News survey of 41 economists. India’s S&P BSE Sensex (SENSEX) stock index dropped for a second day as global funds sold $103 million more shares than they bought in the first three days of last week, paring this year’s inflow to $10 billion, exchange data show.
“I am concerned about the impact of the Chinese data on Indian stocks and the hot-money inflows we have seen this year,” said Paresh Nayar, head of money markets and currency trading at FirstRand Ltd. in Mumbai. “We have a domestic growth story that isn’t that great and now a slowdown in global growth will further pressure the rupee.”
The currency declined 0.5 percent to 54.77 per dollar as of 9:54 a.m. in Mumbai, according to data compiled by Bloomberg. It touched 54.7825 earlier, the weakest since April 8. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 14 basis points, or 0.14 percentage point, to 7.67 percent.
Investors will be watching Indian trade data due this week to gauge the impact of falling global oil and gold prices on the country’s record current-account deficit, Nayar said. While easing crude costs will give “some respite” to a nation that imports more than 80 percent of its oil needs, demand for the precious metal may revive with a fall in prices, he said.
Gold, which plunged into a bear market last week, dropped 2.5 percent today while oil has fallen 3.4 percent in the past week, data compiled by Bloomberg show. Wholesale price-based inflation in India slowed to a 40-month low of 6.27 percent last month, according to the median of 29 estimates in a Bloomberg survey before data due around noon in New Delhi today.
Three-month onshore rupee forwards traded at 55.79 per dollar, compared with 55.59 on April 12, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 55.70 versus 55.48. 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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