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Dec. 9 (Bloomberg) -- India’s rupee completed a weekly drop on signs Europe’s debt crisis is cooling the economy and denting demand for the nation’s assets.
The currency dropped for a fourth day as European leaders’ blueprint for a closer fiscal union to save their single currency left the onus on central banks to address investor concerns that Italy and Spain can keep paying their bills. India’s factory output probably shrank 0.7 percent in October, the first drop since June 2009, according to the median forecast of economists surveyed by Bloomberg before official data due Dec. 12.
“The rupee has been very sensitive to risk-on risk-off dynamics,” analysts at HSBC Holdings Plc, including London- based Global Head of Currency Strategy David Bloom, wrote in a report published yesterday. “Even if global conditions improved materially, we believe the market would remain cautious on the rupee until more convincing domestic signals emerged.”
The rupee fell 1.6 percent this week and 0.5 percent today to 52.0425 per dollar in Mumbai, according to data compiled by Bloomberg. It declined every day this week apart from Dec. 6 which was a public holiday in India. The rupee has lost more than 14 percent this half, the worst performance among Asia’s 10 most-traded currencies.
Three-month offshore rupee forwards traded at 53.25 to the dollar, compared with 52.83 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
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