The rupee fell the most in more than two weeks as better-than forecast US jobs data fueled speculation the Federal Reserve will raise interest rates, leading currencies in most of Asia?s developing economies lower.
The rupee fell 0.6% to 46.57 its weakest close since November 27, according to data compiled by Bloomberg. It closed at 46.2975 on December 4.
The rupee dropped to its lowest closing level in a week as the benchmark stocks index fell for a second day on speculation overseas investors are trimming holdings of the nation?s assets. The fall in shares added to the adverse sentiment for the rupee, said Roy Paul, assistant manager of treasury at Federal Bank Ltd. in Mumbai.
?Shares were not going great guns,? Paul said. ?With dollar gaining overseas, this compounded the problem for the rupee.? India?s benchmark bonds rose for the first time in three days on speculation yields at the highest level in 13 months attracted some investors.
Yields slipped as investors bet the central bank is unlikely to tighten monetary policy and will wait before raising interest rates, according to Kumar Nathani, who manages $25 million of Indian debt at Taurus Asset Management in Mumbai. Ten-year bond yields earlier reached their highest since November 2008 as some policy makers signaled the Reserve Bank of India may need to raise borrowing costs to damp inflation. ?There?s some time before economic indicators give a certainty of timing of monetary policy? action, Kumar said.