India’s Rupee Drops a Third Day on Concern Growth Will Slow
India’s rupee dropped for a third day after the central bank said the nation may need to sacrifice economic growth to control price gains.
Inflation exceeds acceptable levels, Reserve Bank of India Governor Duvvuri Subbarao said yesterday. The wholesale-price index climbed 7.55 percent in May from a year earlier, which is above the tolerance level of 7.5 percent, he said. Funds based abroad sold $107 million more local equities than they bought on June 18, the biggest outflow in almost two weeks, exchange data show.
“The evolving economic fundamentals are not going to support the rupee,” said Vikas Babu, a currency trader at state-run Andhra Bank in Mumbai. “Therefore investor sentiment is weak.”
The rupee dropped 0.3 percent to 56.145 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. The currency touched a record low of 56.515 on May 31.
Three-month offshore non-deliverable forwards traded at 57.29 a dollar, compared with 57.07 yesterday, while the onshore contracts were at 57.17 from 56.95. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
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