India’s biggest stock market slide in almost two years, surging bond yields and an unprecedented plunge in the rupee are pressuring officials for fresh steps to stem capital outflows and revive a struggling economy.
The S&P BSE Sensex (SENSEX) Index sank 4 percent on Aug. 16 as the rupee touched an all-time low of 62.005 per dollar. The yield on the government bond due May 2023 rose 39 basis points to 8.88 percent, the highest on a 10-year note since 2011.
The market rout underscores the failure of months of measures to contain outflows, from higher interest rates to gold import curbs. Foreigners sold a net $3 billion of Indian stocks and bonds in July as the slowest growth in a decade made Asia’s third-largest economy vulnerable to a pullout of funds from emerging markets, spurred by speculation the U.S. Federal Reserve will cool stimulus.
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