- Currency is Asia's worst performer over the past month
- Global funds have withdrawn $2.4 billion from equities in 2016
India’s rupee pared declines after falling within 0.2 percent of a record low as local stocks rebounded.
The currency closed at 68.4675 a dollar in Mumbai, down 0.1 percent from Tuesday, according to prices from local banks compiled by Bloomberg. It dropped as much as 0.4 percent earlier to 68.6750, near an unprecedented 68.845 reached in August 2013. The S&P BSE Sensex of shares ended 0.8 percent higher, reversing an intraday loss of 1.2 percent.
“Stocks recovered smartly and that helped the rupee recoup earlier losses,” said Hari Chandramgethen, head of foreign-exchange trading at South Indian Bank Ltd. in Mumbai.
Indian markets have been caught in a wave of global risk aversion triggered by renewed concern about the health of the world economy. Overseas investors have sold $2.4 billion more local shares than they bought this year. The Sensex is trading in a bear market, having fallen more than 20 percent from a January 2015 record, while the rupee is Asia’s worst-performing currency over the past month, having depreciated 1.3 percent.
Reserve Bank of India Governor Raghuram Rajan said on Feb. 13 that a certain amount of depreciation “is necessary” until inflation comes down, noting the need to keep India’s competitive edge in global trade. Exports fell 13.6 percent in January, a 14th month of declines. Rajan is seen rebuilding the nation’s foreign reserves as the stockpile grew by $2.3 billion in the week to Feb. 5, the most since September.
Sovereign bonds fell for a fourth day, with the yield on notes due January 2026 rising one basis point to 7.79 percent, prices from the RBI’s trading system show. It has climbed seven basis points in four days.