The rupee fell as a slide in the nation’s benchmark share index spurred speculation overseas investors are paring holdings of the nation’s assets.
The currency dropped after the Sensex, lost 3.1%, the most since August 17, extending declines for a sixth day.
“The rupee fell because of the steep decline in stocks, which has raised concern about capital outflows,” said Sudarshan Bhatt, chief currency trader at state-owned Corp Bank in Mumbai. “The rupee seems to be set for more short-term weakness.”
The rupee fell 0.4% to 47.415 per dollar as of the 5pm close in Mumbai, according to data compiled by Bloomberg. Financial markets were closed on Monday for a holiday.
Offshore contracts indicate bets the rupee will trade at 47.49 in a month, compared with expectations of 47.01 at the end of last week.
The rupee also fell as a key gauge that tracks the dollar’s strength gained.
The Dollar Index, which the ICE uses to track the greenback against the currencies of six major US trading partners, added 0.7% in the past six months.