India’s rupee fell 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. Global funds sold a net $103 million shares in the first three days of last week, paring this year’s inflow to $10 billion, exchange data show. The rupee pared losses after inflation eased in March by more than economists predicted.
“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 0.2 percent to 54.6300 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 54.8025 earlier, the weakest since April 8. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 22 basis points, or 0.22 percentage point, to 7.75 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 ships in more than 80 percent of its oil needs, a fall in prices may spur demand in the world’s biggest bullion importer, he said.
Gold, which plunged into a bear market last week, dropped 0.2 percent today while oil has fallen 3.3 percent in the past week, data compiled by Bloomberg show. Wholesale price-based inflation in India slowed to a 40-month low of 5.96 percent last month, official data showed today, compared with a 6.27 percent median estimate predicted in a Bloomberg survey.
Three-month onshore rupee forwards traded at 55.65 per dollar, compared with 55.59 on April 12, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 55.51 versus 55.48. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.