India’s rupee retreated after the nation’s exports fell for a seventh month and the Federal Reserve said it’s on track to raise interest rates this year.
Overseas shipments contracted 15.8 percent from a year earlier in June, the longest stretch of declines since 2009, official data showed after the close of markets on Wednesday. Imports dropped 13.4 percent. A gauge of dollar strength rose to a three-month high Thursday after Fed Chair Janet Yellen reiterated that U.S. borrowing costs will rise this year, a move that could reduce the allure of emerging-market assets.
“The broad rally in the dollar is weighing on the rupee as well,” said Rohan Lasrado, the Mumbai-based head of foreign-exchange trading at RBL Bank Ltd. The Reserve Bank of India is likely to support a weaker currency to aid exports, he said.
The rupee dropped for a second day, falling 0.1 percent to 63.5150 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. The yield on the 10-year sovereign bonds rose one basis point to 7.85 percent, prices from the central bank’s trading system show. It has risen five basis points this week.
The top forecasters see the Indian currency weakening toward a two-year low in 2015 as the central bank balances the need to revive exports with curbing inflation.