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MUMBAI, Aug 12 (Reuters) – The Indian rupee was heading for a weekly decline on Friday despite weaker-than-expected U.S. inflation data, with some traders saying the local currency underperformed its Asian counterparts due to a timely outflow of dollars.
The rupee was trading at 79.70 against the dollar at 09:12 GMT, down from 79.63 in the previous session. The local currency is down 0.6% from a week ago.
By comparison, the onshore Chinese yuan rose 0.4% this week, the Indonesian rupiah rose 1.4% and the Singapore dollar 0.8%. The dollar index was down 1.3% from last Friday amid robust risk appetite and slowing US inflation.
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Meanwhile, foreign investors have bought around $2.4 billion worth of Indian stocks so far this month and $3.3 billion since July 29.
“There is apparently a daily flow mismatch with India running a record trade deficit. The resumption of foreign equity inflows is unable to fill it,” said Jayaram Krishnamurthy, head of research and development. consultant at Almus Risk Consulting.
India reported a record trade deficit of $31 billion for July, prompting some economists to revise their current account deficit and balance of payments projections upwards. Read more
The one-time dollar outflow is rumored to be for some defence-related payments this week, Krishnamurthy added.
“USDINR liquidity has been thin. So one-off flows create rapid unilateral moves,” said Kunal Sodhani, vice president of Shinhan Bank, adding that a drop in crude prices could potentially help the rupiah. , but the decline required sustain.
Brent crude on Friday was little changed at $99.62.
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Reporting by Nimesh Vora; Editing by Neha Arora
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