India's Rupee Weakens Most in Almost Two Months on Risk Aversion

  • Local stocks fall most since September amid EM selloff
  • China data, Middle-East tensions hurt sentiment: RBL Bank

India’s rupee fell the most since November on speculation demand for riskier assets will be hurt as tensions in the Middle East intensify and poor Chinese economic data adds to concern over global growth.

Emerging-market stocks and currencies slumped Monday as manufacturing in China weakened for a fifth straight month, the longest such streak since 2009. Saudi Arabia cut ties with Iran and expelled the Islamic Republic’s diplomats, a day after its embassy in Tehran was attacked to protest the Saudis’ execution of a prominent Shiite cleric.

The rupee depreciated 0.7 percent to 66.6150 a dollar in Mumbai, the biggest decline since Nov. 9, according to prices from local banks compiled by Bloomberg. The S&P BSE Sensex index of shares tumbled 2.1 percent, the most in more than three months.

“The rupee’s fall is on account of worries over slowing world growth after weak Chinese data,” said Rohan Lasrado, Mumbai-based head of foreign-exchange trading at RBL Bank Ltd. “There’s a fair bit of concern over the developments in the Middle East and that is also weighing on the currency.”

The yield on Indian sovereign bonds due May 2025 fell one basis point to 7.72 percent, after climbing as high as 7.75 percent earlier, prices from the central bank’s trading system show. India will likely issue a new 10-year security this week, people familiar with the matter said, causing the notes to reverse losses. The government will offer 80 billion rupees of new 10-year debt at Friday’s auction, according to a central bank statement after trading closed.

The rupee weakened 4.7 percent in 2015 in its fifth straight annual decline, the longest stretch since 2001.

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