Rupee fell to its lowest level in more than three weeks as exchange data showed foreign investment in the nation?s shares slowed amid concern the global economic recovery is faltering.
Net daily additions to overseas ownership of Indian equities declined last week to $55 million from $181 million during the previous five-day period, according to a Sebi data.
?The rupee is unlikely to gain for now because foreign funds seem to be increasing sales in the equity market,? said Roy Paul, deputy general manager at Federal Bank. ?Investor confidence isn?t really strong at the moment.?
The rupee declined 0.3% to 46.905 per dollar. It reached 49.925 earlier, the weakest level since June 11. The rupee?s 5% loss in the past three months is the second-worst performance among Asian currencies after South Korea?s won.
However, 10-year bond yield was near the highest level in more than a week as seven states sold debt and the federal government prepared to borrow later this week.
States sold a planned Rs 4,890 crore of 10-year notes at a sale on Tuesday. The federal government said on Monday it will raise as much as Rs 12,000 crore selling bonds at an auction on July 9. The RBI last week raised interest rates for the third time this year to damp wholesale-price inflation that stayed near a 17-month high.
?It will be difficult to accommodate the supply because demand is weak owing to an uncertain outlook,? said Devendra Das, a fixed-income trader at Development Credit Bank. ?The recent monetary tightening also has to be factored in. The sentiment is negative at the moment.? The yield on the 7.80% note due May 2020 was at 7.61%. It rose to 7.62% on Monday, the highest level since June 25.