India's Rupee Slides Most in Three Weeks as Rally Seen Overdone

  • Currency halts 6-day winning streak, longest since December
  • India to auction debt limits to foreign investors Tuesday

India’s rupee halted a six-day advance on speculation some investors judged the currency’s gains to be excessive.

The rupee dropped 0.4 percent, the most since Feb. 16, to 67.3450 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. The dollar’s 14-day relative-strength index versus the rupee was at 33.6 on Friday, near the 30 level that indicates to some traders a reversal is likely. Indian markets were shut Monday for a local holiday. A gauge of 20 emerging-market currencies declined for the first time in seven days as data showed Japan’s economy and Chinese exports are shrinking.

“We saw an extended rupee rally and some depreciation was required,” said Gaurav Sharma, a senior currency analyst at Religare Commodities Ltd. in Noida, near New Delhi. “Weak export data from China too wasn’t supportive” of regional currencies, he said.

The rupee jumped 2.4 percent in the previous six days and rose to a seven-week high of 67.0850 Friday as foreign funds boosted holdings of local stocks amid a revival in global sentiment for equities. The inflows followed Feb. 29 budget announcements by Finance Minister Arun Jaitley, including retaining the government’s goal of narrowing the fiscal deficit to a nine-year low and boosting spending on roads, ports, power plants and other public projects.

Sovereign bonds fell, with the 10-year yield rising one basis point to 7.64 percent, according to prices from the Reserve Bank of India’s trading system. It slipped 15 basis points last week. India plans to auction 46.81 billion rupees ($695 million) of government debt quotas to foreign investors after the close of markets.

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