India’s rupee fell the most in two weeks as global funds pared holdings of the nation’s assets amid speculation the Federal Reserve will raise interest rates as early as September.
Overseas investors sold a net $479 million of Indian stocks and bonds last week, figures compiled by Bloomberg show. Indian assets could underperform because of factors including poor monsoon rainfall and fading monetary easing expectations, Kritika Kashyap, a Hong Kong-based analyst at Morgan Stanley, wrote in a June 5 note. U.S. employers added 280,000 workers to nonfarm payrolls in May, higher than the 226,000 gain estimated in a Bloomberg survey.
“The positive job numbers have given a boost to the dollar against major Asian currencies,” said Navin Raghuvanshi, a currency trader at DCB Bank Ltd. in Mumbai. “The data have raised the bets on a Fed increase in interest rates in September.”
The rupee retreated 0.5 percent, the most since May 26, to 64.0875 a dollar in Mumbai on Monday, prices from local banks compiled by Bloomberg show. The S&P BSE Sensex index, India’s benchmark equity gauge, fell 0.9 percent.
The yield on the 8.4 percent Indian government notes due July 2024, the current benchmark, climbed two basis points to 8 percent in Mumbai, according to prices from the Reserve Bank of India’s trading system. The yield on notes due May 2025, the new 10-year security issued last month, also climbed two basis points to 7.8 percent.