BS: Indian Rupee Weakens as Global Recovery Jitters Support Dollar
By Anil Varma
June 29 (Bloomberg) -- India’s rupee weakened for the first time in three days as concern the global economic recovery will stall prompted investors to favor the perceived safety of the dollar over emerging-market assets.
Currencies and benchmark stock indexes fell across most of Asia’s developing economies after a gauge that tracks the greenback’s strength yesterday climbed by the most in three weeks. Japan’s factory output and household spending slipped in May and the unemployment rate unexpectedly increased, government reports showed today. The New York-based Conference Board corrected its April measure for the outlook of China’s economy, revising downward the index of key indicators.
“The rupee’s tracking the weakness in stocks and the dollar’s rebound because the latest economic reports from Asia aren’t particularly encouraging,” said Krishnamurthy Harihar, Mumbai-based treasurer at the Indian unit of South Africa’s FirstRand Ltd. “In the medium term, we should see the rupee gradually appreciating, driven by fundamentals.”
The rupee fell 0.5 percent to 46.44 per dollar as of 10:17 a.m. in Mumbai, according to data compiled by Bloomberg. It reached a one-week low of 46.61 on June 25 and Harihar forecast the currency will trade between 46.25 and 46.75 this week.
Offshore forwards indicated the Indian currency will trade at 46.93 to the dollar in three months, compared with expectations of 46.69 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, rose 0.4 percent yesterday, the most since June 4, data compiled by Bloomberg show. It advanced 0.05 percent today.
--With assistance from Patricia Lui in Singapore. Editors: James Regan, Simon Harvey
To contact the editor responsible for this story: Anil Varma at avarma3@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
