Bloomberg News

India’s Rupee Weakens as Greece Deadlock Deters Risk Taking

February 09, 2012

Feb. 9 (Bloomberg) -- India’s rupee fell after a stall in Greek negotiations raised concern Europe’s debt crisis will slow global growth, sapping demand for emerging-market assets.

Overseas funds cut holdings of Indian bonds by $200 million in the two weeks through Feb. 7, exchange data show. Greek Prime Minister Lucas Papademos is meeting European and International Monetary Fund officials as the government tries to resolve a dispute over pension cuts that threaten to scuttle a 130 billion-euro ($172 billion) rescue package. The rupee has advanced 7.4 percent this year after dropping 16 percent in 2011.

“A deal in Greece will be important for the rupee rally to continue,” said Roy Paul, deputy general manager of treasury at Federal Bank Ltd. in Mumbai. “Though some silver linings are emerging from Europe, we will have to wait and watch.”

The rupee declined 0.5 percent to 49.3913 per dollar as of 9:33 a.m. in Mumbai, according to data compiled by Bloomberg.

Three-month offshore non-deliverable rupee forwards traded at 50.30 a dollar, compared with 50.13 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, Anil Varma

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


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