India’s rupee headed for the worst week in more than a month on speculation the debt crisis in Europe will prompt investors to choose the perceived safety of the dollar over emerging-market assets. The currency lost 0.7 percent this quarter, the worst performance after the Thai baht and Malaysia’s ringgit among Asia’s 10 most-used exchange rates. Former Federal Reserve chairman Alan Greenspan said a debt default by Greece is “almost certain.” Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, was cited in Germany’s Tagesspiegel newspaper as saying that resolving the Greek crisis is “extremely difficult.” “The Greece debt situation is just getting worse and the dollar has strengthened because of that,” said Sudarshan Bhatt, chief currency trader at Corporation Bank in Mumbai. “The rupee isn’t getting any support from stocks either.” The Indian currency lost 0.4 percent this week to 44.91 per dollar as of 11:01 a.m. in Mumbai, according to data compiled by Bloomberg. The rupee may drop to 45.20 in the coming week, Bhatt predicted. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed 1.2 percent this week, adding to last week’s 1.4 percent gain. The Bombay Stock Exchange’s Sensitive Index of local shares fell 1.9 percent in the period. Offshore forwards indicate the rupee will trade at 45.55 to the dollar in three months, compared with expectations of 45.56 yesterday and 45.36 at the end of last week. Forwards are agreements to buy or sell assets at a set price and date. Non- deliverable contracts are settled in dollars. To contact the reporters on this story: Anil Varma in Mumbai at avarma3@bloomberg.net. To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

Source