BLBG: Indian Rupee Falls to 3-Week Low on Concern Investment to Slow
By Anil Varma
Oct. 27 (Bloomberg) -- India’s rupee fell to a three-week low on concern foreign investment in local shares will slow after the central bank said yesterday the nation’s economy still faces “downside risks.”
The rupee dropped for a second day, tracking losses in the region’s currencies and stocks, as exchange data showed global funds sold more shares than they bought in the three days through Oct. 23, the longest stretch since Sept. 2. The MSCI Asia-Pacific Index dropped 1.5 percent, the biggest slump since Oct. 2. The Reserve Bank of India is reviewing its monetary policy at a quarterly meeting in Mumbai today.
“The rupee is weakening today, tracking the slide in equities across the world,” said Roy Paul, assistant manager of treasury at Federal Bank Ltd. in Mumbai. “There’s some increase in risk aversion as uncertainties about the economic outlook remain.”
The rupee declined 0.5 percent to 46.8675 per dollar as of 9:59 a.m. in Mumbai, according to data compiled by Bloomberg. It touched 46.9450, the weakest level since Oct. 6. Nine of the 10 most-traded Asian currencies outside of Japan dropped today.
Offshore contracts indicate bets the rupee will trade at 46.96 to the dollar in a month, compared with expectations of 46.71 yesterday. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non- deliverable contracts are settled in dollars rather than the local currency.
RBI Policy Review
The majority of economists surveyed by Bloomberg News expect the Reserve Bank of Indian to leave policy rates unchanged today. Governor Duvvuri Subbarao may keep the benchmark reverse repurchase rate at 3.25 percent and the cash reserve ratio at 5 percent, according to the median forecast of 24 economists in a Bloomberg News survey.
Asia’s third-largest economy may expand 6 percent in the year ending March 31, lower than 6.5 percent estimated last quarter, the central bank said yesterday, citing a survey of seven estimates it conducted from agencies including the World Bank and the Asian Development Bank.
