A customer hands Indian currency notes to an attendant at a fuel station in Mumbai, India, August 13, 2018. REUTERS/Francis Mascarenhas
MUMBAI, Aug 12 (Reuters) – The Indian rupee was headed for a weekly decline on Friday despite softer-than-expected U.S. inflation data, with some traders saying the local currency underperformed its Asian peers due to a one-time dollar outflow.
The rupee was trading at 79.70 versus the dollar by 0912 GMT, compared with 79.63 in the previous session. The local currency is down 0.6% from a week ago.
By comparison, the onshore Chinese yuan was up 0.4% this week, the Indonesian rupiah rose 1.4% and the Singapore dollar by 0.8%. The dollar index was down 1.3% from last Friday amid robust risk appetite and slowing U.S. inflation.
Meanwhile, foreign investors bought about $2.4 billion of Indian shares so far this month and $3.3 billion since July 29.
"There is seemingly a daily flow mismatch with India running a record trade deficit. The pickup in foreign equity inflows is not able to plug it," Jayaram Krishnamurthy, head of research and advisory at Almus Risk Consulting, said.
India reported a record trade deficit of $31 billion for July, prompting some economists to revise their projections for the current account deficit and balance of payments higher. read more
The one-off dollar outflow was rumoured to be for some defence-related payments this week, Krishnamurthy added.
"Liquidity in the USDINR has been thin. Thus one-off flows are creating quick one-sided moves," said Kunal Sodhani, vice president at Shinhan Bank, adding that a fall in crude prices could potentially help the rupee, but the decline needed to sustain.
Brent crude on Friday was little changed at $99.62.
Our Standards: The Thomson Reuters Trust Principles.
Speculators decreased their net long U.S. dollar positions in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.
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