India’s rupee dropped to the lowest level in a week after U.S. jobs data missed economists’ estimates, heightening concern the global economy is slowing and damping demand for riskier assets.
Non-farm payrolls in America rose 80,000 in June, the Labor Department reported July 6, compared with an increase of 100,000 projected in a Bloomberg News survey. The Dollar Index, which tracks the greenback against six major currencies, gained 1.7 percent in the past week. Indian Prime Minister Manmohan Singh, who took over the nation’s finance ministry last month, has urged government officials to accelerate efforts to revive investor confidence.
“The risk factor for the rupee is the strong U.S. dollar,” J. Moses Harding, executive vice president at IndusInd Bank Ltd. (IIB) in Mumbai, wrote in a note to clients today. “Sentiment on domestic cues is yet to turn positive as delivery of expectations is still a work in progress.”
The rupee declined 0.9 percent to 55.9350 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 56.0750 earlier, the weakest level since June 29. The dollar will strengthen further, pushing the rupee as low as 56.50 this week, according to Harding.
Three-month onshore currency forwards traded at 56.95 per dollar, compared with 56.60 on July 6, and offshore non- deliverable contracts were at 56.89 from 56.56. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars.
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