India ETFs Slammed; Rupee Hits Low Against Dollar

November 22nd at 8:00am by John Spence

Exchange traded funds tracking India’s stock market have been among the worst performers in ETFs over the past month on worries over a slowing economy and the country’s deficit.

In currency markets, India’s rupee fell to a record low against the U.S. dollar on Tuesday, which may stoke inflation and hurt efforts to rein in the budget deficit, Dow Jones Newswires reported.

“The sell-off was driven by importers scrambling for dollars in reaction to signals that the central bank isn’t poised to support the Indian currency yet,” according to the report. “India’s finance minister and central bank governor have blamed global uncertainties for driving the rupee down 17% against the dollar since April, making it Asia’s worst-performing currency in 2011. But widening trade and fiscal deficits and relentless inflation in Asia’s third-largest economy have also undercut the rupee.”

Indian ETFs such as WisdomTree India Earnings Fund (NYSEArca: EPI), iShares S&P India Nifty Fifty (NYSEArca: INDY), iPath MSCI India Index ETN (NYSEArca: INP) and PowerShares India Portfolio (NYSEArca: PIN) are down over 11% the past month.

India’s central bank said it’s considering action to stem the decline in the rupee, Bloomberg reported Tuesday. “It is now very difficult to look for reversal in rupee depreciation when the Indian economy is struggling with high inflation, low growth,” said J. Moses Harding, executive vice president at IndusInd Bank, in the article.

PowerShares India Portfolio


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