India’s rupee completed its biggest loss this year as local stocks retreated and a slump in exports widened the nation’s trade deficit to a four-month high.
The S&P BSE Sensex, India’s benchmark equity gauge, slipped 1.95 percent to its lowest close in three weeks. The trade gap reached $11.8 billion in March as overseas shipments dropped 21.1 percent from a year earlier, official figures showed after the end of trading on Friday. Ten-year sovereign bonds were little changed.
The rupee declined 0.9 percent to close at 62.9175 a dollar in Mumbai, its biggest decline since December 16, prices from local banks compiled by Bloomberg show. Monday’s loss pared the currency’s 2015 gain to 0.2 percent.
“The weakness is primarily being driven by the drop in shares, which is leading to foreign banks buying dollars,” said Rohan Lasrado, the Mumbai-based head of foreign-exchange trading at RBL Bank Ltd.
Growth in exports may continue to underperform in the April-June quarter given the softer-than-expected global demand, Deepali Bhargava, a Singapore-based economist at Credit Suisse Group AG, wrote in a report Monday. Reserve Bank of India Governor Raghuram Rajan said this month the rupee’s relative strength is pressuring margins of some exporters.
“The surprise deterioration in the March trade balance has weighed on the rupee today,” Khoon Goh, a Singapore-based senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd., said in an e-mail interview. “We could see the rupee underperforming its regional peers as we head into May, a month which has traditionally seen it depreciate.”
The yield on the 8.4 percent government bonds due July 2024 was little changed at 7.79 percent, according to prices from the central bank’s trading system.