India’s rupee plunged to a record low on speculation a strengthening U.S. economy will prompt the Federal Reserve to pare its $85 billion of monthly bond purchases as soon as next month. Government bonds declined. The Bloomberg Dollar Index climbed 0.5 percent last week as data showed U.S. jobless claims decreased to their lowest level since 2007 and retail sales rose for a fourth month in July. The Fed may taper its stimulus in September by $10 billion, according to the median estimate of economists in a survey concluded last week. The central bank will release minutes of its July 30-31 meeting on Aug. 21. The rupee slid as much as 1.3 percent today to an unprecedented 62.4600 per dollar and traded at 62.3138 at 10:00 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. It weakened 1.3 percent last week. “The rupee is reacting to the strength of the dollar globally and I think the weakness in the local currency will persist,� Ashtosh Raina, head of foreign-exchange trading at HDFC Bank Ltd. in Mumbai, said by phone. “None of the efforts by the government and the central bank seem to be having any impact.� The Reserve Bank of India on Aug. 14 announced measures to limit foreign-currency outflows from local companies and residents, and boosted efforts to lure investment. India will seek to increase capital inflows with steps including allowing state-owned financial companies to issue “quasi-sovereign� bonds to finance long-term infrastructure investment, Finance Minister Palaniappan Chidambaram said Aug. 12. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, surged 69 basis points, or 0.69 percentage point, to 13.41 percent, data compiled by Bloomberg show. Bonds Drop The yield on the 7.16 percent government bonds due May 2023 rose six basis points to 8.96 percent, according to prices from the central bank’s trading system. The rate, which surged 77 basis points last week, is at the highest level for a benchmark 10-year Indian bond since August 2008. Global funds have cut holdings of Indian debt by $9.8 billion since May 22 when Fed Chairman Ben S. Bernanke first signaled the U.S. may reduce bond purchases this year. Primary dealers had to buy 14.44 billion rupees of the 160 billion rupees of debt offered to local investors on Aug. 16, the fourth failure among five weekly auctions since July 19, RBI data show. To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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