Mumbai: The rupee headed for its biggest loss in a month on concern outflows from Indian assets will accelerate after the Federal Reserve raised interest rates and forecast a steeper path for borrowing costs in 2017.
The gains in the dollar against other global currencies and a lower opening in the domestic equity markets weighed on the rupee, forex dealers said.
Besides, foreign fund outflows too kept pressure on the rupee, they said.
The Indian currency dropped 0.6 per cent, the most since November 15, to 67.8150 per dollar as of 9:06am in Mumbai, according to prices from local banks compiled by Bloomberg. The yield on sovereign bonds due September 2026 jumped five basis points to 6.45 per cent, halting a two-day gain for the securities.
Foreign holdings of Indian government and corporate bonds have dropped by 377 billion rupees ($5.6 billion) this quarter, National Securities Depository Ltd. data compiled by Bloomberg show. Overseas investors have withdrawn a net $3.3 billion from local shares in the period. The US central bank said inflation expectations have increased “considerably” and suggested the labour market is tightening.
Meanwhile, the benchmark BSE Sensex fell by 140.66 points, or 0.53 per cent, to 26,462.18 in morning trade.
— Agencies
