Rupee Falls Toward Three-Week Low as Stocks Retreat on Outflows

  • Foreigners sold net $282m of shares last week through Jan. 7
  • China growth worries hurting risk sentiment: South Indian Bank

India’s rupee fell toward a three-week low as concern about China’s deepening economic slowdown quelled demand for riskier assets.

Emerging-market stocks and currencies slumped after data over the weekend showed consumer inflation in China stayed at about half the government’s target while producer prices fell for a 46th month. Overseas funds sold $281.5 million more Indian shares than they bought last week through Jan. 7, the biggest withdrawals in five weeks, data compiled by Bloomberg show. Local stocks and bonds dropped on Monday.

“Risk sentiment isn’t good,” said Hari Chandramgethen, head of foreign-exchange trading at South Indian Bank Ltd. “Worries over China have caused investors to pull out of emerging markets.”

The rupee weakened 0.3 percent to close at 66.8125 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It declined to 66.92 earlier, near a three-week low of 66.9625 reached on Jan. 7. The currency has depreciated 1 percent in January.

The yield on sovereign notes due May 2025 rose one basis point to 7.75 percent, the highest close this year, prices from the central bank’s trading system show. The S&P BSE Sensex index of shares dropped 0.4 percent, taking its loss in 2016 to 5 percent.

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