Rupee Completes Biggest Weekly Drop Since August on Outflowsby
Risk-off sentiment weakening equities and currencies: DBS Bank
Sovereign bond yields rise seven basis points this week
India’s rupee completed the biggest weekly drop in five months and stocks plunged as deteriorating risk appetite spurred outflows from the nation’s equities.
The S&P BSE Sensex index of shares fell for a second week, joining a worldwide sell-off on concern a slowdown in China will curtail global growth. India’s government has said the fiscal outlook for the year starting in April looks “challenging" after cutting its gross domestic product forecast for the 12 months to March. Government bonds fell.
The rupee declined 1.4 percent for the week, the most since Aug. 14, to 67.6050 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It had earlier touched 67.7050, the lowest level since September 2013, and has depreciated 2.2 percent this year.
“It’s primarily the risk-off environment, leading to a correction in equities and resulting in weaker currencies,” said Ashish Vaidya, Mumbai-based head of foreign-exchange trading at DBS Bank Ltd. “We expect the Reserve Bank of India to intervene to smooth out any bout of volatility.”
Overseas investors sold $345.5 million more Indian shares than they bought this week through Jan. 14, taking net outflows this month to $682.2 million, data compiled by Bloomberg show. The Sensex dropped 1.9 percent from Jan. 8, taking its decline this year to 6.4 percent.
The 10-year note yield rose seven basis points this week to 7.81 percent, the biggest increase since Nov. 27, prices from the RBI’s trading system show.