The Indian rupee continued with its losing streak as it posted its second straight weekly loss as Asian stocks plunged over concerns that foreign capital inflows into the region were declining.
The rupee plunged 0.2 percent this week so far and was trading at 60.2775 a dollar on Friday in Mumbai, based on Bloomberg data.
The MSCI Asia Pacific Index of stocks plunged 1 percent, while the Standard & Poor’s BSE Sensex measure of Indian stocks declined 0.4 percent. So far, offshore funds have purchased mean daily stocks worth $135 million in April, which compares to $194 million the previous month.
“Weak stocks in Asian markets weighed on the rupee,” Naveen Raghuvanshi, a currency trader at DCB Bank Ltd in Mumbai told Bloomberg. “Traders were wary ahead of the factory output data and as financial markets are closed on April 14 for a local holiday, “he added.
Industrial output shrunk 1.9 percent in February from a year ago, lagging the median forecast of an expansion of 0.9 percent in a Bloomberg survey of economists, reported the Statistics Ministry.
The one month implied volatility of the rupee, which measures the expected shifts in the exchange rate used to assign price to options, rose 0.89 percentage points, or 89 basis points, on Friday to 9.6650 percent. This was the strongest growth since March 6.
The three month offshore non-deliverable forward contracts on the currency plunged 0.3 percent to trade at 61.52 a dollar, based on Bloomberg data. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at firstname.lastname@example.org