Indian rupee slips in 3 sessions
Indian currency Rupee seems to be heading for its biggest drop since 2013 as INR continued to drop for the third consecutive session following the selling pressure in riskier assets owing to renewed growth concerns on Asia.
The Indian rupee eased 0.2 percent on Wednesday to 65.9875 against the US dollar. The currency fell 0.5 percent in three days and 3.5 percent since the end of June, according to Bloomberg data.
The renewed concerns about the further slowdown in the world's second-largest economy impacted all the regional currencies in a negative way.
The drop in Chinese manufacturing purchasing managers' index (PMI) has affected the market sentiment. The Chinese PMI slipped to its lowest level of 47.0 since 2009. The any level of PMI below 50 indicates deceleration in the economy.
Asian currencies were down as a fresh bout of concerns about the regional growth, observe some economists. The discouraging numbers from Chinese PMI has added to the ongoing worries.
Asia Development Bank (ADB) has recently lowered India's gross domestic product (GDP) to 7.4 percent for the financial year ending March 2016. Earlier, ADB's forecast was 7.8 percent.
The increased demand for dollars from banks and importers has put pressure on Rupee. The Chinese impact was also significant on the rupee, said a forex analyst. Chinese President Xi Jinping recently stated that there wouldn't be any basis for the continuous devaluation of Yuan.
The concerns about Chinese economy impacted the majority of the emerging markets. It may lead to increase in outflows as well, alert forex traders. If it happens, the rise in outflow will further impact Indian rupee. The dollar index stood at 96.28. The dollar index tracks the US dollar's fluctuation against six major global currencies.
The Indian currency on Wednesday resumed trading at 65.67 against the US dollar and moved in the range of 65.95 to 65.55 during the intraday trading. At the end of the day, it closed with a loss of 15 paisa on Wednesday and 21 paisa in two days.
On the other hand, oil prices dropped in the Asian markets eroding previous day's gains. The main reason was stronger dollar and continued concerns about the glut in the global oil supply.
India's 10-year sovereign bonds' yields remain unchanged at 7.72 percent, according to Reserve Bank of India (RBI). There wouldn't be enough time to suppress concerns about the global economy and possible risks in the US economy in next five weeks down the line to US Fed's next meeting in October.