Rupee Declines for a Third Day Amid India Growth ConcernsBy
ADB cuts India's FY16 GDP growth estimate to 7.4 percent
Currency is set for its biggest quarterly drop since 2013
India’s rupee declined for a third day as a selloff in riskier assets deepened amid concern over Asia’s growth outlook.
Regional currencies slumped Wednesday with most equity markets retreating after a preliminary gauge of Chinese manufacturing sank to the lowest level since 2009, indicating that a slowdown in the world’s second-largest economy is worsening. Conflicting signals from the Federal Reserve on when it will start raising interest rates further curtailed demand for emerging-market assets. The Asian Development Bank cut its growth forecasts for the developing economies, including India, on Tuesday.
“Currencies across Asia have been weighed down by concerns about regional growth,” said Navin Raghuvanshi, a currency trader at DCB Bank Ltd. in Mumbai. “The disappointing Chinese data added to those worries.”
The rupee weakened 0.2 percent to 65.9875 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It pared an earlier decline of as much as 0.4 percent as the S&P BSE Sensex index of Indian shares reversed losses. The currency has dropped 0.5 percent in three days and 3.5 percent since the end of June, heading for its biggest quarterly drop since 2013.
The yield on India’s 10-year sovereign bonds was unchanged at 7.72 percent, according to prices from the Reserve Bank of India’s trading system. It has declined 14 basis points this quarter.
The ADB lowered its forecast for India’s economic growth to 7.4 percent for the fiscal year ending March 2016, from 7.8 percent, according to its Asian Development Outlook 2015 Update.
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