Indian Rupee Weakens as Global Stocks Slump Damps Risk Appetite

India’s rupee weakened versus the dollar, falling in tandem with regional currencies as slides in U.S. and Asian stocks damped investor demand for riskier assets.
The currency dropped after data from the capital markets regulator showed funds based abroad stepped up sales of Indian equities last week. The MSCI Asia Pacific Index fell 2.5 percent, headed for its lowest close since 2003, after the U.S. Standard & Poor’s 500 Index sank to a 12-year low yesterday.
“The rupee has weakened on expectations the stock market will witness further losses,” spurring capital outflows, said Roy Paul, assistant manager of treasury at Federal Bank Ltd. in Mumbai. “Asian equities are substantially down and so are those in the U.S.”
The rupee slid 0.5 percent to 49.89 per dollar as of 9:46 a.m. in Mumbai, according to data compiled by Bloomberg. The currency, which has lost 2.2 percent this year, reached 50.0625 on Feb. 18, the weakest since Dec. 3. All of Asia’s 10 most-used currencies excluding the yen declined today.
The rupee may trade as low as 50 today, Paul said. It will end the current quarter at 49, according to the median estimate of 25 strategists and economists surveyed by Bloomberg.
Offshore contracts indicate traders bet the rupee will trade at 50.28 to the dollar in a month, compared with expectations of 49.95 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