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Bloomberg
India’s rupee owes its tag of Asia’s worst-performing currency this year to the selloff sweeping emerging markets. There’s more pain in store from beyond its borders.
While foreign currency debt has zoomed, various external vulnerability indicators paint a rather mixed picture, according to the Reserve Bank of India’s annual report.
Indeed, data due as early as next week will probably show the nation’s current-account deficit widened in the June quarter to 2.6 percent of gross domestic product, the highest in 4 1/2 years.
The widening in the gap is the weakest spot for Asia’s third-largest economy and one of the reasons why the rupee has been among the worst-hit in Asia this year.
The currency dropped to a record 71.7575 per dollar on Wednesday.
The sliding rupee and expectations of a faster-than-anticipated pace of monetary tightening by the US.
Fed saw more than $3 billion of foreign portfolio investments moving out in the April-June period.
Elevated oil prices and the trade tensions between the US and China contributed to the outflows.
Analysts at Nomura Holdings Inc. said India’s foreign exchange reserves at $401 billion are enough to cover eight months of imports.