India’s rupee fell the most in more than two weeks on speculation importers are stepping up purchases of the greenback to pay month-end bills.
The rupee dropped 0.6 percent to end at 63.9775 a dollar in Mumbai, the most since May 7, according to prices from local banks compiled by Bloomberg. The currency has declined 0.9 percent in May, heading for a third straight monthly loss.
“The rupee’s weakness is partly due to dollar demand from importers to make month-end payments,” said Ankur Jhaveri, co-head of currency and rates at Edelweiss Financial Services Ltd. in Mumbai. Expectations the U.S. is moving closer to raising interest rates are also weighing on the rupee, he said.
Increasing borrowing costs in 2015 will be “appropriate,” provided the economy meets forecasts, Federal Reserve Chair Janet Yellen said in a May 22 speech in Providence, Rhode Island. The Bloomberg Dollar Spot Index rose 0.5 percent at 5:27 p.m. in Mumbai, with the currency reaching its strongest level in more than seven years against the yen.
Foreign funds have pulled $1.8 billion from Indian local-currency debt and stocks this month, according to data compiled by Bloomberg.
Asia’s third-largest economy expanded 7.1 percent in the first quarter from a year earlier, compared with 7.5 percent growth in the previous three months, according to the median estimate in a Bloomberg survey before data due May 29. Economic growth is “still slow in picking up,” Reserve Bank of India Governor Raghuram Rajan said in a statement on Monday.
The yield on the government bonds due July 2024, the current benchmark, rose three basis points, or 0.03 percentage point, to close at 7.89 percent, according to prices from the Reserve Bank of India’s trading system. The rate on the new 10-year notes due May 2025, issued last week, fell one basis point, or 0.01 percentage point, to 7.67 percent.