Mumbai: India’s rupee fell the most in seven weeks on speculation importers are taking advantage of the currency’s recent strength to buy dollars.
The rupee rallied 1.4 per cent in September, the best performance among 24 emerging-market exchange rates tracked by Bloomberg. It has advanced 0.6 per cent this month as India remained insulated from China’s economic woes and amid optimism capital inflows will rise after the nation relaxed curbs on foreign ownership of its debt.
“It is a great opportunity for importers to rake up dollars at attractive levels,” said Subramanian Sharma, a director at Mumbai-based Greenback Forex Services Pvt. “The rupee gains were more than warranted.”
The rupee weakened 0.7 per cent to 65.1850 a dollar in Mumbai, the most since August 24, prices from local banks compiled by Bloomberg show. Regional currencies halted a seven-day run of gains Tuesday as a sharper-than-predicted drop in Chinese imports added to signs the world’s second-largest economy is slowing.
The yield on local sovereign bonds due May 2025 fell two basis points to 7.56 per cent, according to prices from the Reserve Bank of India’s trading system. India is said to have sold all of the 56 billion rupees ($861.7 million; Dh3.17 billion) of debt quotas to foreign investors on Monday, enabling them to buy more of the nation’s sovereign notes, people familiar with the matter said, asking not to be identified as they aren’t authorised to speak to the media.
India’s inflation accelerated as RBI Governor Raghuram Rajan looks to maintain an accommodative monetary policy stance. Consumer prices rose 4.41 per cent in September from a year earlier, after a revised 3.74 per cent increase in August, a report showed after the close of markets on Monday. Rajan has cut the benchmark repurchase rate by 125 basis points this year to 6.75 per cent.
