India’s rupee fell for the third time this week after overseas investors stepped up sales of local shares on concern rising interest rates will damp economic growth. The currency has lost 0.8 percent this week as the Reserve Bank of India lifted its repurchase rate by 50 basis points, or 0.5 percentage point, to 7.25 percent on May 3 to cool inflation. Global funds cut holdings of Indian equities by $282 million that day, the most in more than a week, as the central bank said economic expansion may slow to “around 8 percent” in the financial year that began April 1 from an estimated 8.6 percent in the previous 12 months. “The financial market isn’t taking the faster interest- rate increases too well because that’s probably going to have an unfavorable impact on growth,” said Roy Paul, deputy general manager at Federal Bank Ltd. in Mumbai. “The rupee is under some pressure because there are outflows from equities.” The rupee retreated 0.3 percent to 44.575 per dollar as of 10:23 a.m. in Mumbai, according to data compiled by Bloomberg. Offshore forwards indicate the rupee will trade at 45.29 to the dollar in three months, compared with expectations of 45.24 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars. To contact the reporters on this story: Anil Varma in Mumbai at avarma3@bloomberg.net. To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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