Nov. 16 (Bloomberg) -- India’s rupee weakened, approaching 51 per dollar for the first time in more than 2 1/2 years, as investors sought the relative safety of the dollar on concern Europe’s debt crisis will worsen.
The currency fell for a third day as the BSE India Sensitive Index of shares extended yesterday’s biggest loss in a month. The Dollar Index, which tracks the currency’s performance against those of six major trading partners, rose 0.4 percent. Yields on government bonds from France, Belgium, Spain and Austria climbed yesterday to the highest premiums over German bunds since the euro was introduced.
“Investors are buying the dollar amid all the uncertainties we are seeing in the global environment,” said Roy Paul, the Mumbai-based deputy general manager of fixed income and currencies at Federal Bank Ltd. “There could be some resistance at 51, and I expect the Reserve Bank of India may also step in at that point.”
The rupee declined 0.5 percent to 50.9100 per dollar as of 9:45 a.m. in Mumbai, according to data compiled by Bloomberg. It touched 50.9550 earlier, the weakest level since March 2009.
Three-month offshore forwards traded at 51.83 to the dollar, compared with 51.53 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
--Editors: Andrew Janes, Simon Harvey
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