MUMBAI (Reuters) - The rupee weakened for a second straight session on Tuesday, tracking a decline in shares after a selloff sparked concerns about the sturdiness of emerging markets.
Chinese shares plunged on Tuesday, while the yuan posted its biggest one-day decline against the dollar since 2008, reflecting uncertainty about the world’s second-largest economy.
By contrast, traders cited little impact from current account deficit data late on Monday, which widened to 2.1 percent of gross domestic product, although analysts said it was largely within expectations.
Traders said they expect the rupee to remain range-bound ahead of retail price inflation and industrial output data due after the close of markets on Friday.
“Rupee will move largely tracking global factors. CPI may not have a large impact on the rupee unless stocks move. INR should hold in a 61.80 to 62.20 range for the rest of the week,” said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
The partially convertible rupee closed weaker at 61.88/89 per dollar, compared with Monday’s 61.83/84.
Traders said foreign investors will also remain key for the rupee in light of the worries around emerging markets.
Foreign funds have bought shares worth $1.5 billion and debt worth $1.45 billion so far in December, taking total inflows to $17.4 billion and $25.9 billion in each of the two asset classes, respectively.
In the offshore non-deliverable forwards, the one-month contract was at 62.21, while the three-month was at 62.73.
Reporting by Swati Bhat; Editing by Prateek Chatterjee