ETFs tracking Indian stocks were down more than 5% on Tuesday as the rupee plunged to a new record low against the U.S. dollar.
WisdomTree India Earnings Fund (NYSEArca: EPI) slipped 5.2% in early U.S. trading while iPath MSCI India ETN (NYSEArca: INP) dropped 6.4%.
“The Indian rupee sank to a further record low on Tuesday as dismay about the budget costs of new food subsidies added to broader concerns over the economies of emerging markets,” the Financial Times reports.
“A few months back there was hope the economy might start reviving,” said Vaibhav Agrawal, banking analyst at Mumbai-based Angel Broking, in the FT article. “The lower inflation and interest rate cycle, which would have led to growth is at a standstill now . . . The main thing is that there is no business confidence that things can improve.” [India ETFs in a Tailspin with Rupee]
India is one of the worst-performing stock markets in the world in 2013. For example, EPI is down more than 20% the past three months.
In currency markets, the rupee experienced its largest percentage decline in 18 years on Tuesday after the approval of the $20 billion plan to provide cheap grain to the poor renewed doubts about government resolve to control spending ahead of elections due next year, Reuters reports.
WisdomTree Indian Rupee Fund (NYSEArca: ICN) was off nearly 3% at last check Tuesday.
WisdomTree India Earnings Fund