Rupee Drops to Two-Week Low as Fed Rate Bets Spur Dollar Gainsby
RBL Bank doesn't see significant inflows coming into India
The Bloomberg Dollar Spot Index has risen 2.2 percent in May
India’s rupee fell to a two-week low amid speculation the Federal Reserve will still raise interest rates this year, spurring outflows from local stocks.
The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, rose for a sixth day in the longest run since March. It has gained 2.2 percent in May. Traders are still assigning close to a 50 percent chance of at least one Fed rate increase in 2016, even after a report last week showed April jobs gains trailed forecast. Overseas funds have sold a net $41.3 million of Indian shares this month after two months of inflows, data compiled by Bloomberg show.
“The dollar has firmed up against Asian currencies and is also weighing on the rupee,” said Rohan Lasrado, Mumbai-based head of foreign-exchange trading at RBL Bank Ltd. “We don’t see too much of foreign money flowing into the markets.”
The rupee weakened 0.1 percent to 66.6775 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It fell to 66.74 earlier, the lowest level since April 26, and has retreated 0.8 percent this year in Asia’s worst performance.
Sovereign bonds were steady, with the yield on notes due January 2026 at 7.43 percent, according to prices from the central bank’s trading system. The Reserve Bank of India bought 100.14 billion rupees ($1.5 billion) of debt via its open-market operations on Tuesday, according to a statement.