Bloomberg News

Rupee Drops Past 50.5 for First Time Since 2009 on Europe Woes

November 15, 2011

Nov. 15 (Bloomberg) -- India’s rupee weakened beyond 50.50 for the first time in more than 2 1/2 years after a surge in Italian and Spanish borrowing costs intensified concern Europe’s debt crisis will spread.

The currency fell for a second day as the MSCI Asia-Pacific Index of regional shares snapped a two-day gain. The rupee dropped yesterday after the government reported inflation was faster than what economists predicted in October, while the central bank has cut its estimate for economic growth this year.

“I believe the worst is yet to come from Europe, which will push the rupee down further,” said J. Moses Harding, an executive vice president at IndusInd Bank Ltd. in Mumbai. “There is nothing going for the currency, either domestically or from the external sector.”

The rupee declined 0.8 percent to 50.6738 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 50.74 earlier, the lowest level since March 2009.

Italy sold 3 billion euros ($4.1 billion) of five-year bonds yesterday at a yield of 6.29 percent, the highest level since June 1997 and up from 5.32 percent at the last auction on Oct. 13. Spain sold 3.16 billion euros of 12-month and 18-month bills today, compared with a maximum target of 3.5 billion euros.

India’s inflation rate accelerated 9.73 percent in October from a year earlier, government data showed yesterday, compared with a median forecast of 9.65 percent in a Bloomberg News survey of 19 analysts. The economy will expand 7.6 percent in the year to March, the central bank forecasts, lower than its earlier projection of 8 percent.

Three-month offshore forwards traded at 51.53 to the dollar, compared with 51.06 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

--Editors: Simon Harvey, Abhay Singh

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus