India’s rupee dropped for a fourth day yesterday on concern Europe’s debt crisis will slow economic growth and damp demand for emerging-market assets.
The currency touched the lowest level in almost a month as data showed business confidence in Germany was the lowest since 2010.
The rupee later pared losses after European Central Bank council member Ewald Nowotny said there are arguments in favour of giving Europe’s rescue fund a banking license, reviving the debate on bolstering its firepower as leaders face the prospect of a full-scale Spanish bailout.
“The European troubles are daunting, causing broad dollar strength and hurting the rupee,” said Kamlakar Rao, Mumbai- based head of foreign-exchange trading at Allahabad Bank.
The rupee declined 0.1% to 56.1600 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 56.4350 earlier, the weakest level since June 29.
The rupee’s losses will be limited by optimism the government will ease curbs on foreign investment to arrest an economic slowdown, according to state-owned Allahabad Bank.
India’s economy expanded 5.3% in the first quarter of 2012 from a year earlier, the slowest pace since 2003, according to the most recent government data.
Three-month onshore rupee forwards traded at 57.18 per dollar, unchanged from Tuesday, and offshore non-deliverable contracts were at 57.21 from 57.29. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
Indian stocks meanwhile fell to a one-month low amid concern slowing economic growth will hurt corporate earnings already threatened by Europe’s worsening debt crisis.
The Bombay Stock Exchange Sensitive Index dropped 0.4% to 16,846.05, the lowest close since June 18.
from gulf times.