June 1 (Bloomberg) -- India’s rupee fell the most in more than 15 months, tracking declines in Asian stocks, as weaker- than-expected manufacturing data from China spurred concern Europe’s financial crisis will derail global economic recovery.
“The rupee is tracking the weakness across emerging-market stocks because the economic outlook isn’t yet as reassuring as investors would like it to be,” said Krishnamurthy Harihar, treasurer in Mumbai at the Indian unit of FirstRand Ltd., South Africa’s second-largest financial services company. “The rupee may trade in a narrow range after today’s early decline.”
The Indian currency slid 1.7 percent to 47.155 per dollar as of the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. That’s the biggest decline since Feb. 17, 2009. It slumped 4.3 percent last month, the worst performance among Asian currencies after South Korea’s won.
Offshore forwards indicated the Indian currency will trade at 47.65 per dollar in three months, compared with expectations of 46.79 yesterday. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non- deliverable contracts are settled in dollars rather than the local currency.
European Crisis
Fitch Ratings on May 28 stripped Spain of its AAA credit grade, saying the nation’s debt burden may weigh on economic growth. Greek Prime Minister George Papandreou has announced three rounds of deficit-reduction measures this year, spurring violent protests against cuts to wages and pensions. An index of executive and consumer sentiment in the 16 euro nations fell to 98.4 from 100.6 in April, the European Commission said yesterday.
Foreigners have cut holdings of Indian shares by more than $2 billion from a record high of $79.4 billion reached on April 30, data from the Securities and Exchange Board of India show. Funds based abroad last month sold an average $114 million of Indian shares a day more than they bought, following net daily purchases of $111 million in April.
The rupee slumped as a gauge that tracks the dollar’s strength rose to a 14-month high, signaling investors are seeking the greenback’s perceived safety. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, rose as high as 87.473 today, the highest level since March 2009, data compiled by Bloomberg show.
