Weak yuan, NDF maturity push rupee to steepest loss in a fortnight

The rupee is the worst-performing Asian currency this year amid persistent portfolio outflows alongside negative global factors.

The Indian rupee posted its sharpest single-day drop in two weeks on Monday, pressured by dollar bids spurred by the maturity of positions in the non-deliverable forwards (NDF) and weakness in the Chinese yuan.

The rupee INR closed at 87.33 against the U.S. dollar, down 0.5%, its steepest decline since February 25.

There are a "few more NDF maturities lined up this week which could keep USD/INR well bid", a foreign exchange salesperson at a large foreign bank said.Other Asian currencies were mostly lower between 0.1% and 0.3%, and the dollar index was a tad higher at 103.7 after hitting a four-month low last week.

While the rupee was under pressure through the day, dollar sales by two large private banks helped limit losses, a trader at a state-run bank said.Risk appetite remained tepid with U.S. equity futures pointing lower while safe-haven currencies, like the Japanese yen and Swiss franc, gained as investors continued to fret about a slowing U.S. economy and the prospects of a global trade war.

The rupee is the worst-performing Asian currency this year amid persistent portfolio outflows alongside negative global factors."Hanging over the market remains the threat of extensive 'reciprocal' U.S. trade tariffs coming in next month as Washington seeks to level the playing field for trade," ING Bank said in a note. The United States plans to impose tariffs on aluminium and steel imports later this week, and reciprocal tariffs in early April.

Dollar-rupee forward premiums rose, with the 1-year implied yield rising 3 basis points to 2.14% as traders awaited U.S. and Indian inflation data on Wednesday to gauge the future path of policy rates in the two countries.