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Nov. 4 (Bloomberg) -- Mauritius’s rupee gained, trimming its biggest weekly decline in six against the dollar after Greece abandoned a planned referendum on the euro area’s latest bailout plan, reducing the risk of a disorderly default.
The currency gained for the first time in four days, adding as much as 0.5 percent to 28.9 per dollar and traded 0.2 percent higher at 29 by 1:22 p.m. in Port Louis, the capital. The rupee has lost 1 percent this week, the most since the five days through Sept. 23, according to data compiled by Bloomberg. Versus the euro, the currency of its main trading partner, the rupee declined 1.9 percent to 40.0795, paring its biggest weekly gain in six to 2.1 percent.
Greek Prime Minister George Papandreou faces a confidence vote in parliament today that will determine whether he stays on or calls an election. Papandreou yesterday abandoned his planned referendum on the country’s bailout after the plebiscite drew an unprecedented warning from German Chancellor Angela Merkel that a no vote would cost Greece its membership of the 17-nation currency.
“What we see today is the positive market reaction to Greece canceling its December referendum, and it implies a strengthening of the rupee versus the dollar,” Swadiq Nuthay, an economist at Port Louis-based Axys Capital Management Ltd, which oversees five billion rupees ($172.7 million) in assets, said by phone.
The rupee closely tracks the euro’s movement against the dollar, with an average correlation of 0.8 since October. A value of 1 would mean they move in lock step. The euro gained 0.1 percent to 1.3836 per dollar.
Europe is the Indian Ocean island nation’s biggest trading partner for tourism and exports, according to Statistics Mauritius. The euro accounts for about 41 percent of the country’s foreign-currency revenue, data from the central bank show.
Buying prices for the dollar ranged from 28.03 rupees to 28.1951 rupees and the selling price declined to 29.5342 rupees compared with 29.5802 on Nov. 3, according to the exchange rates published on the Bank of Mauritius website.
--Editors: Ana Monteiro, Gavin Serkin
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To contact the reporter on this story: Kamlesh Bhuckory in Port Louis via Johannesburg at firstname.lastname@example.org
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