DFM index flat as trade stays in tight range

Trading values on the bourse were also lower from a session earlier, at Dh299.9 million, 18 per cent of which were in Air Arabia’s shares, with the airline’s stock being the most traded on DFM, and ending the day 0.4 per cent lower |

The sustained weakness in the currency has caused a minirevival of foreign inflows into Indian bonds to splutter. Global funds sold $686.4 million of rupee-denominated debt in the week ended September 7, the most in four months. That’s also more than the combined $460 million of inflows in July and August.

“Right now, we can’t say that we have reached the end, and volatility and tension around flows in EM are likely to remain elevated,” said Manu George, director of fixed income in Singapore at Schroder Investment Management Ltd, which oversees $582 billion. The selloff in the rupee and negative sentiment toward developing markets “continues to weaken investor interest,” he said.

The rupee will end this year at 70 per dollar, according to the median estimate of analysts in a ■ Bloomberg survey. The currency fell as much as 0.4 per cent to a new low of 72.7375 yesterday, while the yield on 10-year bonds rose 3 basis points to 8.19 per cent, the highest since November 2014.

The currency’s persistent weakness has prompted authorities to ask the central bank to intervene more aggressively to stem the slide, people familiar with the matter said. The government may take steps including introducing a deposit plan for overseas Indians, a finance ministry official said.

A stock take of the RBI’s policy toolkit suggests it has limited options to meaningfully influence the rupee’s near-term direction, meaning the currency will remain vulnerable to swings in global sentiment, Barclays said in a research note.

EM risks

India’s trade deficit widened to $18.02 billion in July from $11.45 billion a year earlier, the Commerce Ministry said last month.

“In the near-term, if external EM risks do not ease or trade protectionism rises further, the rupee could weaken well past our FY19 year-end forecast,” UBS analysts Tanvee Gupta Jain and Rohit Arora wrote in a recent note.