India's Rupee Falls Most in a Week Since August on Stocks, Oil
By Anil Varma
March 7 (Bloomberg) -- India's rupee fell by the most in a week since
August
on speculation equity market losses will spur global funds to reduce
investments in the nation.
The currency fell to the lowest in almost six months after data from the
stock market regulator showed funds based abroad increased sales of local
equities. The rupee declined after oil prices climbed to a record, raising
concern India's widening current-account deficit will boost demand for
dollars.
``Foreigners have been sellers of Indian equities and that's pressuring
the
rupee down,'' said Callum Henderson, Singa****e-based head of global
currency
strategy at Standard Chartered Plc. ``A declining surplus in the capital
account will make the rupee more vulnerable'' to the current-account gap.
The rupee weakened 1.3 percent to 40.535 per dollar this week in Mumbai,
according to data compiled by Bloomberg. That is the biggest loss since
the
five days ended Aug. 17 and the lowest closing level since Sept. 17.
The rupee will decline to 40.70 by the end of this month, 41.30 by June 30
and 42.50 by Sept. 30, Henderson said.
India's benchmark share index fell 3.4 percent, rounding off the biggest
weekly loss since May 2006. The index has lost 21.3 percent this year
after
gaining 47 percent in 2007.
Equities, Oil
Funds based abroad sold more shares than they bought in the four days
through March 4, the longest run in more than two weeks, data from the
Securities and Exchange Board of India show. They sold a net $3.2 billion
this year, following net purchases worth a record $17.2 billion last year.
India's capital-account surplus rose to a record $33.9 billion in the
quarter through September, according to the central bank. The
current-account shortfall widened 6 percent to $5.52 billion from the
previous three months.
``There's a sell-off happening in currencies with current- account
deficits
and the record oil price certainly isn't helping the rupee's case,''
Standard Chartered's Henderson said. Also, ``a U.S. recession is going to
have some impact on India's trade balance.''
Gains in crude oil have boosted India's im****t costs. Oil reached a record
$105.97 per barrel in New York yesterday. The cost of India's monthly oil
im****ts climbed to a record $7.7 billion in January, pu****ng the trade
deficit to a record $9.4 billion, the Commerce Ministry said March 3.
Ex****t Growth
A private re****t showed on March 5 U.S. firms unexpectedly cut jobs in
February, stoking speculation the world's biggest economy is headed for a
recession. Firms eliminated 23,000 jobs last month, after adding as many
as
119,000 the previous month, according to ADP Employer Services. The median
forecast of 24 economists surveyed by Bloomberg News was for an addition
of
18,000 jobs.
Weaker demand in the U.S. may damp India's ex****t growth. Tata Consultancy
Services Ltd., India's largest software ex****ter that earns most of its
income in the U.S., said two of its biggest clients deferred projects, the
Hindu Business Line re****ted yesterday, without saying where it got the
information.
India's goods ex****ts grew an average 17.7 percent a month in 2007,
compared
with 21.2 percent in the year earlier, government data show.
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