The Indian rupee tumbled, eroding its earlier advances, on the usual bet that companies purchased U.S. dollar to pay for their imports.
The rupee fell 0.1 percent to 60.2250 a dollar in Mumbai trading. It hit 59.9975 early on Monday, the first time it gained past 60 per dollar since April 9, making it appealing to importers. The currency, which rotated between gains and losses today, also fell due to speculation that the slowdown in China’s economy will weigh on investor inflows into the country.
Foreign investors offloaded a net $1.85 billion worth of local bonds in April, making it the largest outflow since last October.
“There is demand for dollars from importers and some corporates, which has dented the rupee’s gain,” Ashtosh Raina, a head of foreign exchange trading at HDFC Bank Ltd in Mumbai, told Bloomberg.
The rupee had earlier benefitted from the weak U.S. labor market report that showed that the participation rate, which estimates the percentage of working age employees or those actively looking for a job, plunged to the lowest level in 36 years. The report, which was released on May 2, also showed that mean hourly wages plunged while more workers looked for part-time jobs due to lack of enough full-time positions.
Nonetheless, unemployment rate plunged to the lowest level since 2008, reported the Labor Department. Private employers hired 288,000 new workers last month, while unemployment rate was 6.3 percent.
China’s factory activity extended its decline for the fourth straight month in April as the world second-biggest economy slows down. The purchasing managers tracked by Markit Economics and HSBC Holdings Plc stood at 48.1. A figure below 50 shows contraction. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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