Sept. 1 (Bloomberg) -- Mauritius’s rupee is set for its biggest weekly drop in seven against the dollar as the manufacturing industry contracted more than estimated in Europe, curbing demand for riskier assets.
The currency declined as much as 0.7 percent to 28.05 per dollar and traded 0.2 percent down at 27.90 by 2:08 p.m. in the capital, Port Louis, extending its drop this week to 0.5 percent, the biggest since the five days through July 15, according data compiled by Bloomberg. Mauritian markets are closed tomorrow for a public holiday. Against the euro, the rupee strengthened 0.7 percent to 39.8453.
A manufacturing gauge based on a survey of purchasing managers in the 17-nation euro region declined to 49 in August from 50.4 in July, London-based Markit Economics said today. That’s below an initial estimate of 49.7 published on Aug. 23. A reading below 50 indicates contraction.
“It is bad news for us,” Swadicq Nuthay, an economist at the Port Louis-based Axys Capital Management, said in a phone interview. “Our exports of manufactured goods is geared towards Europe, which is also our main source of tourists.”
Europe buys 65 percent of the Indian Ocean island nation’s goods and is the largest source of tourism according to the Central Statistics Office. Mauritius earns most of its foreign currency from tourism, and exports of sugar, clothing and textiles. About two thirds of tourists to the island are from Europe, the statistics office said on May 19.
Euro-denominated revenue accounts for 41 percent of foreign-currency receipts according to the Bank of Mauritius. The rupee closely tracks the euro’s movements against the dollar, with an average correlation of 0.76 in August. A value of 1 would mean that they move in lock step.
Buying prices for the dollar ranged from 27.151 to 27.3295 rupees, while the selling price was 28.6227 per dollar, compared with 28.5508 on Aug. 30, according to indicative exchange rates published today on the Bank of Mauritius’s website.
--Editors: Ana Monteiro, Alex Nicholson
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